NZD/USD Price Analysis: Extends downside to near 0.5800 ahead of Fed Powell’s speech

The NZD/USD pair extends its two-day losing spell as investors turn cautious ahead of the speech from Federal Reserve (Fed) Chair Jerome Powell. Jerome Powell is expected to provide guidance on interest rates and a further roadmap of bringing down inflation to 2%.

Investors expect that Jerome Powell would reiterate the need to keep interest rates elevated at 5.25-5.50% for a longer period to ensure decelerating core inflation to 2%. The US Dollar Index (DXY) consolidates near a three-day high at 106.60.

Meanwhile, the New Zealand Dollar failed to find bids despite being a proxy to China’s economic growth. On Wednesday, the National Bureau of Statistics reported upbeat China’s Q3 Gross Domestic Product (GDP) data. China’s GDP grew strongly by 1.3% in the July-September quarter against expectations of 1.0% and the growth rate of 0.5% recorded in the second quarter of 2023.

NZD/USD slips below the crucial support plotted from September 8 low at 0.5847, which has turned into a resistance for the New Zealand Dollar bulls. The Kiwi asset trades below the 50-day Exponential Moving Average (EMA), indicating that the short-term trend is bearish.

The Relative Strength Index (RSI) (14) slips below 40.00, warranting more downside in the Kiwi asset amid an absence of divergence and oversold signals.

Further downside below the round-level support of 0.5800 would expose the asset to a fresh 11-month low at 0.5740, which 03 November 2022 low. A breakdown below the same would expose the asset to the round-level support at 0.5700.

In an alternate scenario, a recovery move above the psychological resistance of 0.6000 would drive the asset toward September 29 high at 0.6050, followed by August 11 high at 0.6088.

NZD/USD daily chart