NZD/USD Price Analysis: Trades insides Monday's range with focus on US inflation

• NZD/USD trades in a tight range as investors turn cautious ahead of US inflation data.
• The US inflation data will influence market speculation for Fed's interest rate cut size this month.
• China's weak deflation data weighs on antipodeans.

The NZD/USD pair edges higher to near 0.6150 but trades inside Monday's trading range in Tuesday's European session. The near-term outlook of the Kiwi asset remains uncertain as the United States (US) Consumer Price Index (CPI) data for August takes center stage, which will be published on Wednesday.

Economists estimate the annual headline inflation to have decelerated to 2.6% from 2.9% in July. This would be the lowest reading since March 2021, which will boost market speculation for the Federal Reserve (Fed) to start the policy-easing process this month with a large interest rate cut. In the same period, the core inflation -which excludes volatile food and energy prices- is estimated to have risen steadily by 3.2%.

Meanwhile, growing concerns over China's economic outlook have weighed on the New Zealand Dollar (NZD), given that the Kiwi economy is one of the leading trading partners of the world's second-largest nation. China's producer inflation deflated at a faster-than-expected pace in August, which increased evidence of diminishing pricing power at the hands of factory owners due to sluggish household demand.

NZD/USD witnesses a steep fall after a breakdown of the Rising Wedge chart formation on a four-hour timeframe, which results in a bearish reversal. The 20-period Exponential Moving Average (EMA) at 0.6190 starts declining, suggesting the onset of a bearish trend in the short term.

The 14-period Relative Strength Index (RSI) shifts into the bearish range of 20.00-40.00, indicating that a bearish momentum has been triggered.

More downside would appear if the asset decisively breaks the July 17 high near 0.6100. This would push the asset lower to the May 3 high at 0.6046 and the psychological support of 0.6000.

In an alternate scenario, an upside move above the September 6 high of 0.6250 would drive the asset toward the September 2 high of 0.6300, followed by this year's high of 0.6330.

NZD/USD four-hour chart