Ella 
In Asia on Wednesday, the NZD/USD struggled to extend its slight gains and was still near the two-month low of 0.6065-0.6060 hit the day before. NZD/USD is currently trading just below the 0.6100 mark and has been almost flat throughout the day, although a number of factors could help limit the extension of NZD/USD’s losses.
Statistics New Zealand reported that domestic consumer inflation fell to 4.7% in the final three months of 2023 from a senior rate of 5.6%, but remained well above the Reserve Bank of New Zealand’s (RBNZ) target of 1% to 3%. This in turn limits the likelihood of a rate cut by the central bank in the near term, which, coupled with subdued US dollar (USD) price action, could bring some support to the NZD/USD pair.
However, the dollar’s downside appears to be limited, as markets expect the Federal Reserve (FED) to be in no rush to cut interest rates while the U.S. economy remains strong. This, coupled with the risk of further escalation of geopolitical tensions in the Middle East and an uncertain global economic outlook, will likely continue to act as a tailwind for the safe-haven dollar and limit apparent gains against the risk asset NZD.
Traders may also avoid making aggressive directional bets, preferring to wait for key U.S. macro data to be released in the second half of the week — preliminary fourth-quarter gross domestic product and the core PCE price index. At the same time, in early trading on Wednesday in the United States, the U.S. Purchasing Managers Index and U.S. bond yields. Broader market risk sentiment will provide some momentum for the NZD/USD pair.
That said, based on the above fundamentals, it would be prudent to wait for strong follow-through buying before confirming that NZD/USD has formed a near-term bottom and positioned for any further appreciation. Conversely, a break below the 0.6065-0.6060 area would serve as a fresh catalyst for bearish trades and set the stage for NZD/USD to extend its nearly month-long downtrend.
