The NZD/USD currency pair showed an upward movement towards the 0.5700 level on Thursday, driven by a weakening of the US Dollar following disappointing employment data from the United States. This shift reflects a broader decline in demand for the USD as investors reassess the Federal Reserve’s policy direction amidst indications of a cooling labor market.
Recent data from the US Nonfarm Payrolls report revealed that the economy added a mere 57,000 jobs in June, significantly below the expected figure of around 110,000. Furthermore, the previous month’s figures were revised downward, with May’s jobs report adjusted from 172,000 to 129,000. This downward trend suggests a waning momentum in hiring across the nation. Although the Unemployment Rate fell to 4.2%, this decrease was partially influenced by a drop in labor force participation, now at 61.5%, marking the lowest level since 2021.
While wage growth remains steady, as reflected in a 3.5% year-over-year increase in Average Hourly Earnings, it indicates that inflation pressures aren’t entirely fading even as job creation slows. The disappointing payroll figures have diminished expectations for an imminent rate hike by the Federal Reserve.
In parallel, the economic landscape for New Zealand remains closely linked to developments in China, which continues to be a vital external factor for the Kiwi dollar. Investor attention is now turning to the upcoming RatingDog China Services Purchasing Managers Index (PMI), following a positive rebound in May, where the reading jumped significantly from 52.6 to 54.4, signaling the fastest expansion in three months. A robust services PMI could bolster sentiment for the NZD, whereas a slowdown may hinder further gains in the NZD/USD pair.
From a technical perspective, the NZD/USD trades at 0.5694 on the 4-hour chart, maintaining a restrained tone below the 100-period Simple Moving Average (SMA) at 0.5729, despite managing to reclaim the 20-period SMA at 0.5673. The pair is nearing a resistance ceiling formed around the horizontal levels of 0.5699 and 0.5705, while the Relative Strength Index (RSI) hovering around 61 suggests an improving bullish momentum that has yet to break through the overhead barriers.
Immediate resistance appears concentrated at 0.5699 and 0.5705, with further levels of resistance at 0.5718 and the 100-period SMA. Additional resistance levels are identified further up at 0.5907, 0.5930, and 0.5965. On the downside, the initial support is observed at 0.5690, with the 20-period SMA near 0.5673 providing additional backing if sellers regain control.
