NZD/USD Price Analysis: Bears on top ahead of RBNZ but bulls on standby

• NZD/USD is getting set for the RBNZ and holds potential support. 
• Bulls eye a move into shorts with 0.6220s eyed. 

NZD/USD was unable to hold in positive territory on Tuesday and came crashing down from the initial move up in Asia that was met with strong supply for the entire day. The pair fell from a high of 0.6261 and dropped to a low for the day at 0.6202. 

It's been several days that have been driven by the sentiment surrounding the Federal Reserve in between data releases, but today is all about the Reserve Bank of New Zealand.

The market is anticipating a 50bp hike in the Overnight Cash Rate, OCR, to 4.75%, although pricing is a little short of 50bp for today, potentially reflecting the cyclone impact on spending and confidence, as analysts at Westpac said in a note today. Markets price the OCR to peak around 5.4%. 

All in all, the outlook for inflation around the world is higher and that is the commodities bloc positive for which the Kiwi trades as a proxy. There is quite a lot of length that has been building into the US dollar and the Kiwi was been running low on gas for several days which could mean that the path of least resistance is to the upside for a short squeeze as the following analysis leans towards:

NZD/USD H4 chart

The above schematic on the four-hour chart represents a move into the prior support that meets a 38.2% Fibonacci before moving back into the equal lows before a capitulation of the bears (US dollar bulls) to take on the 0.63s in a short squeeze. 

On the other hand, should the RBNZ be more hawkish than expected, there is room for a short squeeze into shorts from 0.6250: