NZD/USD holds neutral as investors await Fed minutes

• The NZD/USD is trading at 0.6167 with mild gains amid Wednesday's session.
• FOMC minutes might impact as the USD could strengthen on an unchanged Fed interest rates outlook.
• The RBNZ's policy rate outlook may add pressure on the NZD/USD pair amidst falling inflation.

In Wednesday's session, the NZD/USD traded modestly higher at 0.6167 with the upside limited amid speculations of the Federal Reserve’s (Fed) unchanged rate outlook and softer New Zealand inflation data making the Kiwi struggle to gain ground.

Ahead of the Federal Open Market Committee (FOMC) minutes, the USD holds its ground, with recent data reinforcing the notion that the Federal Reserve is unlikely to lower interest rates in the near term. However, markets will look for insights into the minutes to see the openness of the officials to start cutting or any additional information to continue shaping their expectations for the next meeting. As for now, the easing cycle is being delayed to June.

On the other side of the currency pair, New Zealand reported Q4 Producer Price Index (PPI) with input prices rising by 0.9% QoQ, down from Q3's 1.2%, and output prices by 0.7% QoQ, a slight reduction from 0.8% in the previous quarter. However, a year-on-year view saw an uptick in input prices of 1.9% from Q3's 1.5%. Even though inflation remains high in New Zealand, the easing pressures indicate a trend towards disinflation putting off additional tightening measures from the Reserve Bank of New Zealand’s (RBNZ) back. This aligns with the market expectations of disinflation continuing, and the RBNZ maintaining the policy rate hovering above its neutral estimate, with no additional tightening expected. In that sense, as the Fed and RBNZ seem to align, the pace of the pair may be dictated by the health of each country’s economies.

NZD/USD technical analysis

On the daily chart, the Relative Strength Index (RSI) readings for the NZD/USD show an escalation from the negative territory into the positive zone in the last sessions while the Moving Average Convergence Divergence (MACD) prints green bars, indicating that the bulls are in command.

In relation to the pair's position related to its main Simple Moving Averages (SMAs), it is positioned above the 20, 100, and 200-day SMAs, suggesting a longer-term bullish control.

NZD/USD daily chart