It appears the upside momentum in the NZD/USD has come to a halt near the 0.6150 level. The Kiwi pair appears to be struggling with the 0.6150 resistance along with the recovery in the US Dollar Index (DXY).
Looking ahead, the US Dollar Index (DXY) is likely to experience high volatility after the release of the US CPI and interest rate policy. Both of these events can have serious effects on the NZD/USD and will likely dictate its next direction.
If we look at the USD index, it appears to be showing a strong rebound after touching the support at 103.30. For now, it appears that the Wall Sreet is mixed about the interest rate policy decision and it is showing in the pairs like NZD/USD as well.
New Zealand's Q1 GDP In Focus
Although the economic data from the USA is important, we also can't ignore the data coming out of New Zealand. After all, one of the components of the Kiwi pair includes the NZD currency as well.
Looking ahead, the Q1 GDP data of New Zealand is awaited as the market expects a contraction of 0.1%. Earlier New Zealand's GDP contracted by 0.6%, which tells us that the markets are a little optimistic about improved economic conditions in New Zealand.
On a yearly basis, the GDP of New Zealand is expected to grow by 2.6% which is higher than the -2.2% contraction reported last time.
The technical outlook of the Kiwi pair shows hat it has already crossed the 0.6111 resistance level, which is now serving as a cushion for the bulls. In addition, the trendline that started from the 11th May high near 0.6385 is also supporting the upward move in the NZD/USD.
Furthermore, the 200 EMA is present around 0.6147 which is preventing the NZD from making any advances towards the upside.
The RSI indicator which shows the momentum direction in the NZD/USD still continues to trade in the bullish zone (60 - 80).