NZD/USD trades lower after being rejected by the 20-day SMA, US CPI

• The NZD/USD is suffering losses, moving downwards towards the 0.6220 level.
• The market mood remains cautious, as no significant highlight was seen on Wednesday’s economic docket.
• US Core CPI is seen easing, which may boost the pair.

In Wednesday's trading session, the NZD/USD pair decreased, landing around 0.6226. The drop, which tallied a 0.25% loss, comes on a quiet Wednesday while market players brace themselves for upcoming Consumer Price Index (CPI) data on Thursday. In addition, the pair faced rejection at the 20-day Simple Moving Average (SMA), which contributed to the downside.

The Consumer Price Index for December is anticipated to be 3.2% YoY, a slight progression from the preceding 3.1%. The Core measure figure is projected to soften at 3.8%, a dip from November’s 4%.

Recent data shows that the US economy is still going strong thanks to favorable financial conditions, helping the USD hold its ground. However, the Dollar remains vulnerable due to persistent dovish bets on the Federal Reserve easing, which has yet to materialize. Investors look upon watching remarks from Fed's Williams at the end of the American session for any potential clues on the bank’s next steps. As for now, investors re seeing rate cuts anticipated in March and May and a total of five in 2024, contradicting the Fed’s protected three. However, those bets may change on the outcome of December’s CPI.

NZD/USD levels to watch

The daily chart suggests that the pair has a tinge of selling momentum building in the immediate term. This is reflected by the declining position of the Relative Strength Index (RSI) within negative territory, indicating the potential strengthening of selling pressure. Moreover, this bearish sentiment is echoed by the rising red bars on the Moving Average Convergence Divergence (MACD), with sellers potentially gaining momentum.

Meanwhile, the pair's position across multiple Simple Moving Averages (SMAs) puts a different spin on the picture. It's positioned below the 20-day SMA, a signal that might usually indicate bearishness. However, with the pair above both the 100-day and 200-day SMAs, it suggests that buyers still hold the reins in a broader perspective.

In spite of the near-term neutral to bearish sentiment, the pair's position above longer-term SMAs indicates a dominant buying momentum, at least on a broader horizon. This hints that while sellers may seek to push the pair lower in the immediate future the buyers still have strength to limit any downside.

NZD/USD daily chart