NZD/USD Price Analysis: Correction drags bulls below 20- and 50-EMAs, 0.6100 a critical support

• Loss of momentum near 0.6100 has strengthened the kiwi bulls for a bullish reversal.
• The asset has surrendered the cushion of 20- and 50-EMAs.
• Going forward, the announcement of the interest rate decision by the RBNZ will be of utmost importance.

The NZD/USD pair is displaying a vulnerable performance right from the first tick printed in early Tokyo. It looks like the correction from Tuesday’s high at 0.6146 has been carry-forwarded on Wednesday ahead of the interest rate decision by the Reserve Bank of New Zealand (RBNZ).

The greenback bulls have remained in a dominant position for the past month. Now, the dominant position is facing troubles as the oscillators are displaying exhaustion signals. The asset continuously formed lower lows while the Relative Strength Index (RSI) (14) formed higher lows, which indicates a loss of downside momentum and is termed a negative bullish divergence.

The correction from Tuesday’s high at 0.6146 has dragged the asset below the 20- and 50-period Exponential Moving Averages (EMAs) at 0.6128 and 0.6134 respectively has turned the short-term bullish bias into negative.

The release of the interest rate decision by the RBNZ will fetch extreme volatility on the counter. However, a decisive break above Tuesday’s high at 0.6146 will drive the asset towards the round-level resistance of 0.6200. A breach of the latter will send the asset to near June 4 high at 0.6253.

Alternatively, the greenback bulls could extend losses if the asset drags below June 11 low at 0.6097. This will bring a serious decline in the asset towards 19 May 2020 low at 0.6033, followed by the psychological support at 0.6000.

NZD/USD hourly chart