NZD/USD Price Forecast: Approaches 0.5900 resistance area as US Dollar weakens

The New Zealand Dollar (NZD) has strengthened against the US Dollar (USD) on Wednesday as the greenback encountered pressure across the board due to diminishing expectations of immediate Federal Reserve interest rate increases. Following a dip to 0.5820 levels on Thursday, the NZD/USD pair surged to session highs above 0.5880, with bulls targeting the two-month peak just above 0.5900.

Elias Haddad from Brown Brothers Harriman pointed out that "softer US CPI and PPI inflation in July" has reduced the likelihood of a Federal Reserve rate hike in September to nearly 30%, the lowest since the June 17 FOMC decision. This shift in expectations has maintained a restrained USD and bolstered risk appetite, despite ongoing US-Iran tensions.

The NZD/USD pair remained above the 200-day simple moving average on Thursday and has been on a strong upswing, trading at 0.5883 at the time of writing and adhering to the technical support trendline from late-June lows. Momentum indicators in the daily chart are leaning towards bullish, with the Relative Strength Index (RSI) near 59 indicating a positive outlook, while a slightly negative Moving Average Convergence Divergence (MACD) hints at potential weakness in the upside pressure.

Traders are watching the range between 0.5905 and 0.5920, where August 3 and 7 highs coincide with the 61.8% Fibonacci retracement of the June selloff, as the next key resistance level. Should the pair break higher, the 0.6000 mark, where bulls faced resistance in May and early June, awaits as the subsequent target. On the flip side, initial support is anticipated around the upward trendline, now at 0.5850, and the 200-day SMA at 0.5831, which could present a hurdle for the bears. Should prices dip further, the late July lows near 0.5760 might come into play.