At make or a break around 0.6300

• NZD/USD drops gradually from 0.6360 amid recovery in the US Dollar.
• Investors see the Fed reducing interest rates from March 2024.
• NZD/USD delivers a breakdown of the upward-sloping chart pattern.

The NZD/USD pair faces nominal sell-off near 0.6360 as the US Dollar has attempted a recovery move despite thin trading activity. The Kiwi asset struggled to extend recovery as the higher risk-appetite of the market participants is fading away.

The US Dollar Index (DXY) has rebounded to near 101.20 but the broader appeal is still bearish as investors hope that the Federal Reserve (Fed) will start reducing interest rates from March 2024. Consistently easing price pressures and labour market conditions would allow Fed policymakers to endorse rate cut decision.

Next week, further action in the US Dollar will be guided by the Manufacturing PMI and the Employment data for December. While the New Zealand Dollar will be in action due to the release of the Caixin manufacturing PMI data for December.

NZD/USD is at a make or a break level around 0.6300. The asset has delivered a breakdown of the Rising Channel chart pattern formed on an hourly scale. The 20-period Exponential Moving Average (EMA) has started declining, which indicates that the near-term trend has turned bearish.

A range shift move by the Relative Strength Index (RSI) (14) into the 20.00-60.00 region from the bullish territory of 40.00-80.00 indicates a bearish momentum.

Fresh downside move appear if the asset drops below December 25 low at 0.6246. This would expose the asset to November 29 high at 0.6208 and December 14 low at 0.6168.

In an alternate scenario, a recovery move above December 28 high of 0.6370 would drive the asset towards December 26 high near 0.6410. Breach of the latter would open upside for February 2 near 0.6463.

NZD/USD hourly chart