NZD/USD Price Analysis: Minor pause in rally around 0.6150 as USD Index recovers, US CPI in focus

• NZD/USD has witnessed a minor decline around 0.6150 due to a decent recovery in the USD Index.
• NZ's quarterly GDP is seen contracting by 0.1% against a prior contraction of 0.6%.
• Further persistence in the US core inflation could accelerate the odds of one more interest rate hike from the Fed.

The NZD/USD pair has witnessed a halt in the upside momentum around 0.6150 in the European session. The Kiwi asset has faced delicate barriers as the US Dollar Index (DXY) has attempted a solid recovery. Sheer volatility in the US Dollar Index is highly expected as investors are turning anxious ahead of the United States inflation and the interest rate decision by the Federal Reserve (Fed).

The USD Index has shown a solid rebound after testing territory below 103.30 as the street is mixed about the interest rate policy. Investors will keep focus on the US Consumer Price Index (CPI) data and further persistence in core inflation could accelerate the odds of one more interest rate hike from the Fed.

On the New Zealand Dollar front, Q1 Gross Domestic Product (GDP) will remain in the spotlight. Quarterly GDP is seen contracting by 0.1% against a prior contraction of 0.6%. On an annualized basis, the economic data is expected to expand by 2.6%, higher than the prior contraction of 2.2%.

NZD/USD has climbed above the horizontal resistance plotted from April 26 low at 0.6111, which has turned into a cushion for the Kiwi bulls. The downward-sloping trendline plotted from May 11 high at 0.6385 is acting as a barricade of the New Zealand Dollar.

Also, the 200-Exponential Moving Average (EMA) at 0.6147 is restricting the New Zealand Dollar from any upside move.

The Relative Strength Index (RSI) (14) has shifted into the bullish range of 60.00-80.00, which indicates that upside momentum has been triggered.

A confident break above May 01 low at 0.6160 will drive the Kiwi asset toward the round-level resistance at 0.6200 followed by May 17 high at 0.6261.

Alternatively, a downside move below the intraday low at 0.6015 will expose the asset for a fresh six-month low toward 11 November 2022 low at 0.5984. A slippage below the latter would expose the asset toward 02 November 2022 high at 0.5941.

NZD/USD four-hour chart