NZD/USD Price Forecast: Finds bids below 61.8% Fibo retracement

The New Zealand Dollar (NZD) has managed to regain half of its initial losses against the US Dollar (USD) but remains down by 0.17% at approximately 0.5770 during the European trading session on Tuesday. The Kiwi currency is broadly pressured as the US Dollar outperforms, with financial markets showing increasing confidence that the Federal Reserve (Fed) will raise interest rates during their policy meeting on Wednesday.

At this moment, the US Dollar Index (DXY), which measures the Greenback's value against six major currencies, is up 0.15% to nearly 99.62. Economists at ING have revised their forecast to anticipate a 25 basis point Federal Reserve rate hike in September, following Chair Kevin Warsh's remarks at the Jackson Hole symposium, and believe that subsequent economic data has supported this decision.

While the Fed's stance on maintaining a tightening monetary policy is acknowledged, they argue that this time, it is considered "one and done" due to their projections indicating no further need for rate hikes, given the economic data on jobs and inflation. In the daily chart, NZD/USD is currently at 0.5769, maintaining a bearish outlook as it trades below the 20-day Exponential Moving Average (EMA) at roughly 0.5854 and also under the mid-Fibonacci retracement band around 0.5808.

The Relative Strength Index (RSI) is around 33, near oversold territory, indicating sustained downside momentum that could face resistance if selling pressure intensifies from present levels. On the upside, initial resistance is found at the 50.0% Fibonacci retracement near 0.5808, followed by a tightly packed cluster around 0.5850-0.5854, where the 38.2% retracement and the 20-day EMA intersect, before the 23.6% level at 0.5903.

On the downside, key support levels include the 61.8% retracement at 0.5765, deeper cushioning at the 78.6% level around 0.5705, and the prior swing base close to the 100% retracement at 0.5628; a sustained breach below these levels would strengthen the prevailing bearish sentiment.