NZD/USD Price Forecast: 200-EMA acts as key support

• NZD/USD gains to near 0.5955 as the US Dollar takes a breather after gains for over two weeks.
• Fed Waller reiterates the need to reduce interest rates in the policy meeting later this month.
• Investors await NZ's Q2 CPI data, which will be released on Monday.

The NZD/USD pair rises 0.4% to near 0.5955 during the Asian trading session on Friday. The Kiwi pair gains as the US Dollar (USD) struggles to extend its over two-week rally amid uncertainty surrounding trade talks between the United States (US) and the European Union (EU).

US President Donald Trump expressed confidence on Wednesday that there is a possibility of a trade deal with the EU. Meanwhile, EU trade chief Maros Sefcovic has headed to Washington for a fresh round of trade talks. Last weekend, Trump imposed 30% tariffs on imports from the trading bloc.

On the domestic front, Federal Reserve (Fed) Governor Christopher Waller has reiterated views that the central bank should cut interest rates in the July policy meeting. "The Fed should cut interest rates by 25 basis points (bps) at July meeting as rising risks to economy and employment favour easing policy rate," Waller said on Thursday in a gathering at New York University.

Contrary to Waller's remarks, the CME FedWatch tool shows that the Fed is certain to leave interest rates steady in the range of 4.25%-4.50% in the policy meeting later this month.

In New Zealand (NZ), investors await the Q2 Consumer Price Index (CPI) data, which will be published on Monday. The CPI report is expected to show that inflationary pressures grew at a moderate pace of 0.6%, compared to a 0.9% increase seen in the first quarter.

NZD/USD attracts bids near the 200-day Exponential Moving Average (EMA), which is around 0.5910. However, the overall trend remains bearish as the 20- and 50-day EMAs slope downwards.

The 14-day Relative Strength Index (RSI) slides to near 40.00. A fresh bearish momentum would trigger if the RSI falls below that level.

Going forward, a downside move by the pair below the June 23 low of 0.5883 will expose it to the May 12 low of 0.5846, followed by the round-level support of 0.5800.

In an alternate scenario, the Kiwi pair would rise towards the June 19 high of 0.6040 and the September 11 low of 0.6100 if it manages to return above the psychological level of 0.6000.

NZD/USD daily chart