NZD/USD Price Forecast: USD bulls keep Kiwi pair below 200-day EMA

The NZD/USD pair slides to near 0.5855 during the late European trading session on Friday, the lowest level seen in 10 days. The Kiwi pair weakens as the US Dollar (USD) extends its recent recovery move, with the US Dollar Index (DXY) rising to near 97.60.

The US Dollar has been outperforming its peers since the monetary policy announcement by the Federal Reserve (Fed). On Wednesday, the Fed reduced interest rates by 25 basis points (bps) to 4.00%-4.25% and signaled that there will be two more interest rate cuts in the remainder of the year.

The Fed pivoted to unwinding the monetary policy restrictiveness as the United States (US) labor market conditions have deteriorated. “Demand for labour is down a little more sharply than supply of labour, and I can no longer say labor market is solid,” Fed Chair Jerome Powell said.

Meanwhile, the broader outlook of the New Zealand Dollar (NZD) remains weak as traders expect the Reserve Bank of New Zealand (RBNZ) to cut interest rates again in the monetary policy meeting next month. In August, the RBNZ reduced its Official Cash Rate (OCR) by 25 basis points (bps) to 3%.

NZD/USD extends its winning streak for the third trading day on Friday. The Kiwi pair stays below the 200-day Exponential Moving Average (EMA), which trades around 0.5920, indicating that the overall trend is bearish.

The 14-day Relative Strength Index (RSI) falls to near 40.00. A fresh bearish momentum would emerge if the RSI breaks below that level.

Going forward, a downside move by the pair below the August 2 low of 0.5800 will expose it to the April 11 low of 0.5730, followed by the round-level support of 0.5700.

In an alternate scenario, the Kiwi pair would rise towards the June 19 high of 0.6040 and the September 11 low of 0.6100 if it manages to return above the psychological level of 0.6000.

NZD/USD daily chart