NZD/USD Forex Technical Analysis – US Non-Farm Payolls Data Sets the Tone with Focus on Hourly Wage Inflation

The New Zealand Dollar is trading flat on Friday as investors brace for the release of the U.S. January Non-Farm Payrolls report at 13:30 GMT. The currency is coming off a volatile session that saw it hit an eight-month high on Thursday only to have it close sharply lower for the day.

At 07:04 GMT, the NZD/USD is trading .6476, down 0.0001 or -0.01%.

The Kiwi took a step-back on Thursday after a steep drop in European bond yields ended up benefiting the U.S. Dollar overall, while also extending a bull run in local debt markets.

US Non-Farm Payrolls Report on Tap

In today’s U.S. Non-Farm Payrolls report, analysts expect 185,000 jobs were added to the economy last month. This will be the lowest amount since January 2021. Analysts are also looking for the unemployment rate to edge up to 3.6%, and hourly wage inflation to stay flat at 0.3% on a monthly basis. The latter will indicate the strong labor market might have started to ease up.

Ahead of the report, futures market traders are pricing in another 25-basis point rate hike from the Fed at its March policy meeting, while implying that might be the end of its current tightening cycle. They have also priced in one rate cut by the end of this year, a move that Powell dismissed in his post-meeting press conference on Wednesday.

A weaker-than-expected NFP report will support the case for the Fed to end its rate hiking cycle in March. This could fuel a rally in the NZD/USD.

Daily NZD/USD Technical Analysis

The main trend is up according to the daily swing chart. However, yesterday’s closing price reversal top may be signaling a shift in momentum to down.

A trade through .6538 will negate the chart pattern and signal a resumption of the uptrend. A move through .6191 will change the main trend to down.

The minor trend is up. A trade through .6413 will change the minor trend to down. This will shift momentum to the downside.

The nearest support is the long-term 50% level at .6467, followed closely by the minor pivot at .6452. The closest resistance is the June 3 main top at .6576.

Daily NZD/USD Technical Forecast

Trader reaction to the 50% levels at .6467 and .6452 is likely to determine the direction of the NZD/USD on Friday.

Bullish Scenario

A sustained move over .6467 will indicate the presence of buyers. The first upside target is a minor pivot at .6500, followed by the minor top at .6538. Overtaking this level will likely lead to a surge into .6576.

Bearish Scenario

A sustained move under .6452 will signal the presence of sellers. This could trigger a sharp break into the minor bottom at .6413. If this fails then look for the selling to possibly extend into the support cluster at .6366 to .6364.