NZD Hits Two-Month Low as Strong US Labor Data Boosts Dollar

The NZD/USD pair dropped sharply toward the 0.5790 zone on Friday, driven by a surge in the US Dollar (USD) following a robust Nonfarm Payrolls (NFP) report. The New Zealand Dollar struggled to find support as market sentiment turned cautious, with the pair trading at 0.5791—its lowest point in two months.

Data from the Bureau of Labor Statistics revealed that the US economy added 172K jobs in May, far exceeding the market forecast of 85K. This follows a revised April gain of 179K, signaling continued strength in the US employment sector.

While the unemployment rate remained stable at 4.3% and annual wage growth slowed slightly to 3.4% from 3.6%, the overall resilience of the labor market suggests the Federal Reserve may maintain higher interest rates for a longer period, providing significant tailwinds for the Greenback.

Investors are now looking ahead to next week’s US Consumer Price Index (CPI) and further labor market data, as well as New Zealand’s Business NZ Performance of Manufacturing Index (PMI).

Short-term technical analysis:

On the 4-hour chart, NZD/USD is trading at 0.5793, maintaining a bearish trajectory. The price remains below the 20-period Simple Moving Average (SMA) at 0.5871 and the 100-period SMA at 0.5882, confirming the current downward trend. However, the Relative Strength Index (RSI) has dipped into oversold territory near 23, suggesting that while sellers are dominant, the pair may be prone to a corrective bounce.

Immediate resistance is identified at 0.5802, followed by levels at 0.5813 and 0.5843. A broader resistance band is formed by the 20-period SMA (0.5871) and the 100-period SMA (0.5882), both of which must be reclaimed to alleviate the bearish momentum. To the downside, critical support sits at 0.5790; a break below this level would likely open the door for further declines.

Source link