NZD/USD Price Forecast: Slumps below 0.5950 as antipodeans underperform

• NZD/USD falls sharply to near 0.5940 as antipodeans underperform their peers.
• Traders have become increasingly confident that the RBNZ could reduce interest rates in the policy meeting in August.
• Uncertainty surrounding trade talks between the US and its trading partners would keep the US Dollar on cliffhanger.

The NZD/USD pair trades almost 0.4% lower to near 0.5940 during the European trading session on Tuesday. The Kiwi pair declines as both antipodeans: the New Zealand Dollar (NZD) and the Australian Dollar (AUD) are underperforming their peers amid growing expectations that central banks from both economies will reduce interest rates in their August monetary policy meeting.

Traders raise Reserve Bank of New Zealand (RBNZ) dovish bets as price pressures cooled down at a faster pace in the second quarter of the year. The data showed on Monday that the New Zealand (NZ) Q2 Consumer Price Index (CPI) grew moderately by 0.5%, compared to expectations of 0.6% and the prior release of 0.9%.

Theoretically, easing price pressures often lead to monetary policy easing by the central bank.

Markets now imply around an 80% probability the RBNZ will cut the 3.25% cash rate a quarter point at its meeting on August 20, Reuters reported.

Meanwhile, the US Dollar (USD) gains ground after a corrective move in the last two trading sessions. However, the outlook remains uncertain as the August 1 tariff deadline approaches and Washington has closed deals with a handful of its trading partners.

NZD/USD continues to hold 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) trades close to 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