NZD/USD Forex Technical Analysis – Strong Non-Farm Payrolls, Lower Unemployment Rate Will Weaken Kiwi


The New Zealand Dollar is trading higher against its U.S. counterpart early Friday as traders square positions ahead of today’s major U.S. Non-Farm Payrolls report.

Today’s early strength is enough to flip the Kiwi back to the plus side on the weekly chart after a two-day plunge was fueled by hawkish comments from Fed Chairman Jerome Powell on Wednesday.

At 05:26 GMT, the NZD/USD is trading .5822, up 0.0047 or +0.81%.

Analysts are saying the Reserve Bank of New Zealand (RBNZ) continues to emphasize its goal is to curb inflation at all costs, even if that risks recession. That being said, traders are wagering it will hike by a super-sized 75 basis points to 4.25% later this month, and ultimately take rates to 5.25%.

In contrast, U.S. traders are nearly at 50% for either a 50 or 75 basis point Fed rate hike in December. This may explain the renewed strength in the New Zealand Dollar.

US Non-Farm Payrolls Report on Tap

Traders are looking ahead to Friday’s October nonfarm payrolls report for further clues into the health of the U.S. economy.

The Labor Department releases its report for October at 12:30 GMT. The data is expected to show a gain of 197,000 jobs. The Unemployment Rate is expected to have risen from 3.5% to 3.6% and Average Hourly Earnings are expected to have risen 0.3%, unchanged from September.

If Non-Farm Payrolls come in higher than expected, or if the unemployment rate comes in steady to lower then look for the NZD/USD to weaken.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .5740 will signal a resumption of the downtrend. A move through .5942 will change the main trend to up.

The intermediate range is .6162 to .5512. The NZD/USD is currently trading on the weak side of its pivot at .5837, making it resistance.

The short-term range is .5512 to .5942. Its pivot at .5691 is the nearest downside target. On the upside, the major resistance is a long-term 50% level at .5991.

Daily Swing Chart Technical Forecast

Trader reaction to .5837 is likely to determine the direction of the NZD/USD on Friday.

Bullish Scenario

A sustained move over .5837 will indicate the presence of buyers. The first target is .5842, followed by the main top at .5942.

Bearish Scenario

A sustained move under .5837 will signal the presence of sellers. Taking out .5740 will indicate the selling pressure is getting stronger. This could extend the move into the short-term pivot at .5691.

Watch for a technical bounce on the first test of .5691, and an acceleration to the downside if this level fails as support.


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