NZD/USD poised for further gains as US Dollar flows falter

• NZD/USD held steady near recent highs on Monday.
• Upcoming New Zealand GDP figures are expected to show economic contraction.
• The Fed's looming interest rate call is widely expected to kick off a rate-cutting cycle.

NZD/USD looked upwards on Monday, testing chart territory just south of 0.5980. The New Zealand Dollar (NZD) has caught a near-term gust of bidding wind as the US Dollar (USD) slumps ahead of the latest interest rate call from the Federal Reserve (Fed). The Fed is broadly expected to kick off a new rate-cutting cycle, and investors will be keeping their heads down in the run-up to Wednesday's rate call.

The Fed will also be delivering its latest Summary of Economic Projections (SEP), the 'dot plot' of what interest rate changes Fed policymakers believe will happen in the near future. Markets are broadly expecting the Fed to deliver three straight 25 basis-point interest rate cuts through the end of the year, and traders will be looking to see signs that the Fed's SEP lines up with current rate expectations. The Fed will deliver its latest interest rate decision on Wednesday.

New Zealand's latest GDP figures, due on Thursday, are expected to show a quarterly contraction in NZ growth metrics. New Zealand's second-quarter growth is expected to backslide by 0.3% QoQ, and contract by a slight 0.1% on the annualized figure.

NZD/USD price forecast

The Kiwi is testing into recent highs near 0.5980, but the 0.6000 handle remains well out of reach of current technical momentum. The pair is running out of bullish gas after breaking through the 200-day Exponential Moving Average (EMA) near 0.5915, and a technical resistance zone is baking into the charts near current price action, warning of another leg lower.

NZD/USD daily chart