The NZD/USD pair continued its winning streak on Friday, with the New Zealand Dollar gaining ground against the US Dollar. This was driven by the US Dollar hitting a three-week low ahead of key economic data releases, including the US Nonfarm Payrolls (NFP) and the ISM Services PMI report for April.
Investors are closely watching these economic indicators as they will provide insights into labor demand and overall economic health, influencing the Federal Reserve’s decisions on interest rates. Speculation is rife that the Fed may start reducing interest rates as early as September.
The US NFP is expected to show a decrease in job creation compared to the previous month, with investors also focusing on Average Hourly Earnings as a key indicator of wage growth and inflation outlook. Meanwhile, the Services PMI is anticipated to show improvement from the previous reading.
On the other hand, the New Zealand Dollar has been strengthening, supported by steady Labor Cost Index growth. This has raised expectations that the Reserve Bank of New Zealand (RBNZ) may delay rate cuts later this year.
In terms of technical analysis, the NZD/USD pair is approaching the upper boundary of a Falling Channel formation on a daily timeframe. Momentum oscillators suggest a potential bullish reversal, but a pullback to the upper boundary could present a selling opportunity. The asset’s near-term outlook looks positive as long as it remains above the 20-day Exponential Moving Average.
An upside move above the psychological resistance level of 0.6000 could push the pair towards higher resistance levels at 0.6050 and 0.6100. Conversely, a downside break below support levels at 0.5860 and 0.5847 could signal further declines.
Overall, the NZD/USD pair is influenced by key economic data releases and technical indicators, with market participants closely monitoring developments for potential trading opportunities.