NZD/USD Price Analysis: Builds cushion near lower end of rising channel around 0.6200

The NZD/USD pair is displaying a back-and-forth action in a narrow range of 0.6191-0.6212 continuously since Friday. The Kiwi asset has turned sideways and signs of recovery are solidifying as the US Dollar Index (DXY) has shown some correction.

The USD Index (DXY) has corrected to near 103.00 after failing to extend recovery above 103.36. S&P500 futures have generated solid gains in the morning session on hopes that more financial support to mid-size United States lenders from the Federal Reserve (Fed) would infuse confidence among investors and in households for making more deposits.

Fewer chances of continuation of ongoing increases in the interest rate by the Federal Reserve (Fed) after the banking fiasco have heavily impacted US Treasury yields. The return offered on 10-year US Treasury bonds has dropped sharply to near 3.37%. Contrary, economists at Goldman Sachs believe that the Fed will announce two more rate hikes in May and June by 25 basis points (bps).

NZD/USD is demonstrating a small inventory adjustment near the lower edge of the Rising Channel chart pattern formed on a two-hour scale. In a Rising Channel chart pattern corrective moves are considered as buying opportunities by the market participants.

The Kiwi asset is auctioning below the 20-period Exponential Moving Average (EMA) at 0.6222, which indicates that the short-term bias is still on the downside.

Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00, which also favors a downside bias.

An extension of recovery above March 07 high at 0.6223 will drive the asset toward March 13 high at 0.6265 followed by the upper end of the chart pattern around 0.6325.

On the flip side, a breakdown of March 21 low at 0.6167 will drag the asset toward March 15 low at 0.6139. A slippage below the latter will expose the asset for more downside toward the round-level support at 0.6100.

NZD/USD two-hour chart