Revisits monthly low near 0.6100

• NZD/USD drops to a monthly low near 0.6100 as traders brace for RBNZ policy decision.
• The RBNZ is expected to further cut its OCR by 50bps to 4.75%.
• Investors await US inflation data for further guidance on the Fed’s interest rate outlook.

The NZD/USD pair is hitting a monthly low near the round level support of 0.6100 in Tuesday’s North American session. The Kiwi pair is weakening as the New Zealand Dollar (NZD) is under pressure ahead of the Reserve Bank of New Zealand’s (RBNZ) policy decision due on Wednesday.

The RBNZ is expected to cut its official cash rate (OCR) by a larger-than-usual 50 basis points (bps) to 4.75% as the central bank focuses on reviving economic growth. The board also unexpectedly cut its lending rates by 25 bps in August.

Meanwhile, weakness in Chinese markets due to the unavailability of specific details on the allocation of funds in the 200 billion yuan stimulus package unveiled by National Development and Reform Commission (NDRC) Chairman Zheng Shanjie, after the long National Day celebration fell through . for prompt recovery of the kiwi dollar.

On the United States (US) front, the US dollar (USD) is struggling to extend its gains as investors focus on September consumer price index (CPI) data due on Thursday. Inflation data will influence market expectations about the outlook for Federal Reserve (Fed) interest rates for the rest of the year. The core CPI – which excludes volatile food and energy prices – is estimated to have risen steadily by 3.2%.

NZD/USD extends its losing streak for a sixth session on Tuesday. The Kiwi pair found temporary support near the 200-day exponential moving average (EMA) around 0.6100.

The 14-day Relative Strength Index (RSI) dipped to near 40.00. A bearish impulse would be triggered if the oscillator slips below the aforementioned level.

More downside would occur if the pair breaks below the horizontal support drawn from the 9/11 low around 0.6100. The asset would decline further towards the May 3 high of 0.6046 and the psychological support of 0.6000 if it breaks below the September 11 low.

On the other hand, a reversal move above the 20-day EMA at 0.6230 will lead the asset towards the September 3 high of 0.6302 and the September 30 high near 0.6380.

NZD/USD Daily Chart