The NZD/USD pair made gains toward the 0.5700 mark on Thursday, attributed to a decline in the US dollar (USD) after disappointing US jobs data surfaced. This uptick indicates a notable reduction in demand for the dollar as investors re-evaluated the Federal Reserve’s policy outlook in light of a softened U.S. labor market.
Recent U.S. non-farm employment figures reveal that jobs increased by only 57,000 in June, significantly lower than the anticipated 110,000. Additionally, the May numbers were revised down from an earlier 172,000 to 129,000, further suggesting a slowdown in hiring activity. Although the unemployment rate dipped to 4.2%, this was, in part, due to a decrease in the labor force participation rate, which fell to 61.5%, the lowest since 2021.
Wages have seen consistent growth, rising 3.5% year-over-year, indicating that inflation pressures are lingering despite slower job growth. However, the weak payroll numbers have dampened expectations for any near-term interest rate hikes from the Fed.
China remains a crucial external influence for the New Zealand dollar as its export potential is closely linked to Chinese demand. Investors are keenly watching the upcoming RatingDog China Services Purchasing Managers’ Index (PMI) following May’s rise from 52.6 to 54.4, the most significant increase in three months. Strong services data may bolster sentiment for the NZD, but an economic slowdown could hamper significant upward movement for the NZD/USD.
Short-term technical analysis:
In the 4-hour view, NZD/USD is currently at 0.5694, showing a generally muted tone as it remains beneath the 100-period simple moving average (SMA) of 0.5729, despite recently regaining the 20-period SMA of 0.5673. The pair hovers near resistance levels formed by 0.5699 and 0.5705, while the Relative Strength Index (RSI) around 61 hints at improving bullish momentum that has yet to break through the upper resistance.
For potential gains, immediate resistance is concentrated at 0.5699 and 0.5705, with further levels at 0.5718 and the 100-period SMA at 0.5729. In contrast, on the downside, initial support lies at 0.5690, and if sellers reassert control, the 20-period SMA near 0.5673 may act as the next line of defense.
