Stays inside prior day’s range ahead of RBNZ policy

• NZD/USD is oscillating inside the previous day’s range as the focus shifts to RBNZ policy.
• The USD Index is struggling to find strength despite rising wage pressures.
• NZD/USD is forming an Inverted Head and Shoulder chart pattern, which indicates a wide consolidation.

The NZD/USD pair is displaying topsy-turvy moves below the round-level resistance of 0.6200 in the European session. The Kiwi asset has turned choppy as investors are awaiting the interest rate decision by the Reserve Bank of New Zealand (RBNZ), which is scheduled for Wednesday at 2:00 GMT.

S&P500 futures have recovered its entire losses posted in Asia, portraying recovery in the risk appetite of the market participants. The US Dollar Index (DXY) has rebounded briskly to near 102.45. The USD Index is struggling to find strength despite rising wage pressures and sustainability in labor market conditions.

Meanwhile, RBNZ Governor Adrian Orr will likely keep interest rates unchanged at 5.50%, marking an end to its 20-month-long hiking cycle, as reported by Reuters to avoid further calamity in economic prospects. Investors should note that the New Zealand economy has already entered into a recession.

NZD/USD is forming an Inverted Head and Shoulder chart pattern on a two-hour scale, which indicates a wide consolidation. A breakout of the neckline plotted from June 22 high around 0.6220 will result in a bullish reversal. The 50-period Exponential Moving Average (EMA) at 0.6179 is providing cushion to the New Zealand Dollar bulls.

The Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00, which indicates a sideways performance.

Going forward, a decisive break above June 22 high around 0.6220 will drive the asset towards June 14 high at 0.6236 followed by May 17 high at 0.6274.

Alternatively, a downside move below June 23 low at 0.6116 will expose the asset June 05 low at 0.6041. A slippage below the latter would expose the asset to psychological support at 0.6000.

NZD/USD two-hour chart