NZD/USD Trades Sideways, Consolidates Above 0.6100

The Kiwi traded sideways on Monday, with the NZD/USD pair fluctuating in a narrow range between 0.6105 and 0.6130 as investors await fresh cues from the Federal Reserve's interest rate decisions. The pair is currently consolidating amidst growing uncertainty over when the Fed will start reducing interest rates, with some market participants anticipating rate cuts in September and further moves in November or December.

• The NZD/USD remains range-bound between 0.6105 and 0.6150 over the past week or so, reflecting indecisiveness as investors seek clarity on future Fed policy. The pair is trading below the 20-day EMA at 0.6130, while the 14-day RSI has ticked below 50.
• Key levels to watch: Immediate support is around 0.6100 (Round number/ 50-day EMA), with additional support at 0.6050 (April 4 high) and 0.6000 (psychological level/June 14 low). On the upside, resistance is seen at 0.6222 (June 12 high), with further resistance at 0.6250 and 0.6280 (January highs).
• The US-NZ 2yr swap is 4bps higher at -28bps.
• Market sentiment: Analysts expect the NZD to lose its recent gains as the RBNZ is anticipated to cut interest rates aggressively starting in November. Despite the current high policy rate of 5.5%, economic fundamentals are weakening, with GDP per capita declining and business sentiment indexes showing pessimism.
• The Treasury Department's Fortnightly Economic Update reveals that key sectors of New Zealand's economy are weakening, with declining performance indexes and reduced activity in areas sensitive to interest rates, suggesting continued slowdown and underperformance compared to expectations.
• Upcoming data: Calendar is empty today