NZD/USD Price Analysis: Advances above 0.6100 on hawkish RBNZ bets

• NZD/USD rallies to 0.6130 as investors see the RBNZ raising key rates further.
• Fed policymakers hold themselves from offering a timeline for rate cuts.
• NZD/USD delivers a bullish reversal after a negative divergence formation.

The NZD/USD pair climbs to near 0.6130 in the London session on Friday. The Kiwi asset strengthens as investors see the Reserve Bank of New Zealand (RBZ) tightening interest rates further due to persistent price pressures and steady labor demand.

Analysts at ANZ see the RBNZ raising its Official Cash Rate (OCR) by 25 basis points (bps) in February and April, taking the policy rate to 6%.

The underperformance of the US Dollar against the New Zealand Dollar is likely as the Federal Reserve (Fed) is done hiking interest rates and is now watching inflation closely to begin rate cuts.

The US Dollar Index (DXY) falls back in the woods as Fed policymakers are not offering a detailed rate-cut timeframe this year. The Fed has speculated three rate cuts, but unavailability of the timeframe is propelling anxiety among market participants.

NZD/USD delivers a sharp recovery after witnessing a negative divergence on a four-hour chart. The Kiwi asset formed a lower low at 0.6037 while the momentum oscillator 14-period Relative Strength Index (RSI) made a higher low.

The asset has climbed above the 50-period Exponential Moving Average (EMA), which indicates a bullish near-term outlook. The RSI (14) has climbed above 60.0, which indicates more upside amid an absence of overbought signals.

More upside would appear if the asset decisively breaks above the horizontal resistance plotted from the January 31 high at 0.6170. This would drive the asset toward the round-level resistance of 0.6200, followed by January 10 high at 0.6255.

On the flip side, a breakdown below February 5 low of 0.6037 would expose the asset to the psychological support of 0.6000 and November 9 high at 0.5955.

NZD/USD four-hour chart