NZD/USD Price Analysis: Remains near daily low, still comfortable above 0.6300

• The NZD/USD pair pulled back on Tuesday, snapping a five-day winning streak and a one-month high.
• A combination of factors is helping the USD to gain some traction and put pressure on.
• The technical situation continues to favor the bulls and supports near-term earnings prospects.

The pair NZD/USD It attracts some sellers on Tuesday and breaks a five-day winning streak to break a 1-month high around the 0.6355-0.6360 zone hit the day before. The pair maintains its offered tone during the North American session and currently stands near the daily low, still comfortably above 0.6300.

The US dollar (USD) is gaining some positive traction for the second day in a row and it turns out to be a key factor putting some downward pressure on the NZD/USD pair. The Fed’s Official Lending Survey for the first quarter released on Monday eased fears of a full-blown banking crisis in the US. Other than that, a generally weaker tone around equity markets further benefits to the dollar, a safe haven, and contributes to the tone offered around the Kiwi, sensitive to risk.

That said, the growing acceptance of an imminent pause in the year-long Federal Reserve (Fed) rate hike cycle could discourage dollar bulls from making aggressive bets. This, along with expectations of further rate hikes from the Reserve Bank of New Zealand (RBNZ), should limit losses for the NZD/USD pair. Market Participants may also prefer to wait on the sidelines before the release of the latest US Consumer Inflation figures due on Wednesday before positioning for the next directional move.

Even from a technical perspective, the sustained overnight break of a downtrend line, which runs from the yearly high reached in February, favors bullish traders. Furthermore, the oscillators on the daily chart remain in positive territory and are still far from the overbought zone. This, in turn, supports the prospects for an extension of the recent appreciation move seen in the last two weeks or so. Therefore, the ongoing corrective slippage is likely to be bought.

The NZD/USD pair looks set to retest the April monthly swing low around the 0.6380 zone, on the way to 0.6400. Some trailing buying should pave the way for further gains and have the potential to lift spot prices towards the next relevant hurdle near the 0.6435-0.6440 region, above which the bulls could try to recapture 0.6500.

On the other hand, the breakout point of trend line resistance, currently around the round figure of 0.6300, seems to protect the immediate downside. If it continues lower, it is likely to attract new buyers and remain capped near the 100-day SMA around the 0.6255 area. The latter should act as a solid base for the NZD/USD pair, which if broken down decisively will set the stage for a deeper corrective fall.

NZD/USD daily chart

Key levels to watch