• NZD/USD generates moderate gains as the US Dollar drops despite easing Fed rate cut expectations for June.
• The RBNZ has projected that inflation will rise by 0.8% in the first quarter of this year.
• Investors await the US Retail Sales data for fresh guidance.

The NZD/USD pair is slightly up by 0.08% at 0.6160 in Wednesday’s early American session. The Kiwi asset is broadly sideways as investors shift focus to the United States Retail Sales data for February, which will be published on Thursday. The Retail Sales will indicate the strength in households’ spending, which feeds the consumer price inflation.

The US Dollar is inches down to 102.80 despite easing expectations for the Federal Reserve (Fed) to reduce interest rates in the June policy meeting. The CME Fedwatch tool shows that traders see a 65% chance for the Fed to announce rate cuts in June, which was above 72% before the release of February’s inflation report.

Meanwhile, easing New Zealand inflation expectations are expected to bring some relief for households. Latest forecasts from the Reserve Bank of New Zealand (RBNZ) show that consumer prices will rise by 0.8% in the quarter to March period. The annual inflation is projected to decline to 4.2% from 4.7% in the last quarter of 2023. The RBNZ is expected to keep interest rates higher for longer as current price pressures are significantly higher than the desired rate of 2%.

NZD/USD trades back and forth from almost two months, ranging between 0.6037-0.6218 on a four-hour timeframe. A prolonged consolidation indicates indecisiveness among market participants.

The 14-period Relative Strength Index (RSI) trades in a 40.00-60.00 range, which indicates a sharp volatility contraction.

Going forward, a downside move below February 13 low near 0.6050 would expose the asset to the psychological support of 0.6000, followed by November 9 high at 0.5956.

On the flip side, an upside move would emerge if the asset will break above the round-level resistance of 0.6200, which will drive the asset towards February 22 high at 0.6220, followed by January 11 high at 0.6260