NZD/USD Price Forecast: Rises in limited range with US CPI in focus

The New Zealand Dollar (NZD) trades 0.13% higher at around 0.5860 against the US Dollar (USD) during the European trading session on Wednesday, but remains inside Tuesday's trading range. The Kiwi pair gains as the US Dollar underperforms despite Federal Reserve (Fed) interest rate hike expectations.

At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.2% lower to near 98.65.

According to the CME FedWatch tool, the odds of the Fed hiking interest rates at the policy meeting next week stand at 60%.

Meanwhile, investors keenly await the United States (US) Consumer Price Index (CPI) data for August, which will be published on Friday.

US core inflation seen contained as goods weakness offsets firm services

According to economists at TD Securities, the upcoming US CPI release is likely to show that “underlying inflation stayed under control in August,” with “the core expected to rise 0.19% m/m.” They expect “the services segment [to] be the main driver of inflation, while core goods prices likely acted as a drag, posting a modest m/m drop.” On an annual basis, TD Securities projects that “core CPI rose 2.3% on a y/y basis, down 10 bps vs July, while headline inflation likely stayed unchanged at 3.4% y/y.” The bank cautions that “we see the risks to our forecasts as skewed to the upside given that we're assuming a number of large price declines in tariff-exposed goods categories.”

NZD/USD Technical Analysis

NZD/USD trades at 0.5860, holding a mildly bearish near-term bias as it sits below the 20-day exponential moving average (EMA) at 0.5889. The pair has slipped back under this short-term trend gauge, suggesting upside attempts are being capped for now, while the Relative Strength Index (RSI) around 45 points to fading bullish momentum without yet entering oversold territory.

On the topside, initial resistance is located at the 20-day EMA near 0.5890, and a daily close above this level would be needed to ease immediate downside pressure and reopen the path toward the recent highs. Looking down, the September low at 0.5802 is the key support level.