NZD/USD Dynamics Ahead of RBNZ Meeting and US CPI Release

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As the NZD/USD pair hovers around 0.6042, traders are closely monitoring its price action amid a backdrop of technical indicators and impending fundamental events. Recent movements suggest a potential continuation of the bearish trend, characterized by a convergence of factors including Fibonacci levels, RSI divergence, and a looming RBNZ meeting.

The NZD/USD pair has shown signs of recovery in the past day, yet remains entrenched within a bearish trend. A notable divergence in the RSI on the H4 timeframe, in conjunction with the 38.2% Fibonacci level, indicates potential weakness in the pair's upward momentum. Additionally, the presence of a bearish order block, denoted by a red rectangle, suggests a possible local double top scenario, reinforcing the bearish sentiment.

Attention turns to the Reserve Bank of New Zealand (RBNZ) monetary policy meeting scheduled for Wednesday. Market expectations lean towards the RBNZ maintaining its cash rates at 5.5% for the sixth consecutive meeting, with emphasis placed on the need to sustain restrictive policies to combat inflation. The RBNZ's cautious stance, particularly in light of concerns surrounding record immigration, is likely to impact the NZD/USD pair's trajectory.

Furthermore, the NZD/USD pair's recent gains coincide with improved risk appetite ahead of the release of Consumer Price Index (CPI) data from the United States (US). Forecasts anticipate an uptick in headline CPI for March, while the core measure is expected to moderate. However, the US Dollar (USD) is striving to regain lost ground amidst prevailing market volatility, posing potential headwinds for the NZD/USD pair.

In light of these factors, traders may consider adopting a cautious approach towards the NZD/USD pair. Monitoring key technical levels, such as the aforementioned Fibonacci retracement and RSI divergence, can provide valuable insights into potential price movements. Additionally, remaining attuned to developments surrounding the RBNZ meeting and US CPI release is essential for informed decision-making.

Given the overall bearish bias, traders may explore short-selling opportunities, particularly following a local retest of key resistance levels. However, prudent risk management practices should be adhered to, with stop-loss orders placed to mitigate potential losses in the event of adverse price movements.

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