The NZD/USD currency pair experienced a significant decline, dipping sharply toward the 0.5790 region on Friday. This decline was largely attributed to a robust strengthening of the US Dollar (USD), prompted by a stronger-than-anticipated Nonfarm Payrolls (NFP) report. Meanwhile, the New Zealand Dollar (NZD) found it challenging to attract buyers in an environment characterized by caution.
As of the latest trading, the NZD/USD pair was trading at 0.5791, marking its lowest point in two months. The recent report from the Bureau of Labor Statistics revealed that the US economy added 172,000 jobs in May, a figure that far surpassed market expectations of 85,000. This gain followed an upward revision of the April figures, which had shown a 179,000 increase. Additionally, the Unemployment Rate remained steady at 4.3%, while annual wage growth saw a slight dip to 3.4%, down from 3.6%.
This data has reinforced perceptions of a resilient labor market, prompting speculation that the Federal Reserve (Fed) may need to maintain elevated interest rates or even implement further hikes in the near future. Such expectations have bolstered the USD against its rivals.
Looking ahead to next week, market participants will be closely monitoring the US Consumer Price Index (CPI) report and additional labor data. Meanwhile, New Zealand is set to unveil the Business NZ Performance of Manufacturing Index (PMI), which will be scrutinized for insights into the economic outlook.
From a technical analysis standpoint, the 4-hour chart indicates that NZD/USD remains under a downside bias, trading at 0.5793. The pair’s price is positioned below both the 20-period Simple Moving Average (SMA) at 0.5871 and the 100-period SMA at 0.5882. This technical configuration solidifies a bearish outlook in the short term, with the Relative Strength Index (RSI) slipping into oversold territory near 23. While selling pressure persists, there are indications that the downside could become susceptible to corrective rebounds.
On the upside, initial resistance is noted at 0.5802, followed by more significant levels at 0.5813, and then 0.5843. If the price were to reclaim these areas, it would likely attract renewed supply and challenge the bearish sentiment. Conversely, immediate support is identified at 0.5790. A decisive break below this level would expose the pair to fresh lows, keeping the bearish market forces firmly in control.
