NZD/USD Forecast: Dollar Strengthens Ahead of US PCE, Kiwi Drops Below 0.5950 to Weekly Low

NZD/USD faced renewed selling pressure on Wednesday, with the pair dipping to around 0.5945 during early European trading, marking a fresh weekly low. At the time of writing, NZD/USD was trading near 0.59501, as markets turned cautious ahead of the US Personal Consumption Expenditures (PCE) price index release, while broad US dollar strength weighed on the risk-sensitive Kiwi.

**Dollar Strength Dominates Near-Term Direction**

The US Dollar Index found support ahead of the key inflation data, with markets anticipating the PCE figures could influence the Federal Reserve's policy trajectory. According to market sources, if inflation data remains sticky, expectations for further Fed rate cuts may continue to cool, providing additional upside momentum for the greenback. Against this backdrop, the Kiwi, highly sensitive to risk sentiment, faces a clearly defined near-term downward pressure.

**Kiwi Technical Support Under Test**

On the technical front, NZD/USD has weakened for multiple consecutive sessions, with bears gradually testing the key support zone below. Analysts suggest that if the pair sustains trading below 0.5950, the next significant support level could be eyed at 0.5930. Market sources indicate this level represents the bottom of the recent weekly range, and a break below could trigger deeper technical selling, opening further downside space.

**Focus on PCE Data and Risk Sentiment Linkage**

Market attention has shifted to the upcoming US PCE data release. If the data reinforces expectations of persistent inflation, the dollar could extend gains, putting additional downward pressure on NZD/USD. Conversely, any signs of cooling in the data could pause the dollar's rally, offering the Kiwi a brief respite. However, with global risk sentiment remaining broadly cautious, the Kiwi's rebound momentum is likely to stay limited.