NZD/USD Forex Technical Analysis – US Payrolls and Wage Data Will Set the Tone

The New Zealand Dollar is trading nearly flat early Friday as traders await the release of the December U.S. Non-Farm Payrolls report at 13:30 GMT. The data could have an impact on the Fed’s next interest rate decision on Feb.1, along with next week’s December U.S. Consumer Price Index.

At 07:12 GMT, the NZD/USD is trading .6230, up 0.0003 or +0.05%.

The NZD/USD fell on Thursday after data pointed to a strong jobs market a day before today’s highly anticipated employment report for December, supporting the prospect that the Federal Reserve could keep hiking rates at an aggressive pace. Private employment increased more than expected and jobless claims dropped to a three-month low next week.

Friday’s government jobs and wage data for December will be used by investors to gauge how high the U.S. central bank is likely to raise rates, and for how long.

It is expected to show that employers added 200,000 jobs in the month, while average hourly earnings are predicted to have risen 0.4% in December for an annual increase of 5%. The unemployment rate is expected to come in unchanged at 3.7%.

What to Expect

A stronger-than-expected report, especially average hourly earnings, will increase the chances of a 50 basis point rate hike by the Fed in February. This should put pressure on the NZD/USD.

A weaker-than-expected reading could underpin the NZD/USD, but it won’t necessarily be bearish because the Fed is still likely to raise its benchmark interest rate by 25 basis points. Nonetheless, remember that the market has priced in a 75 basis point rate hike by the RBNZ.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6200 will signal a resumption of the downtrend. A move through .6372 will change the main trend to up.

The NZD/USD is on the weak side of a long-term Fibonacci level at .6231, making it resistance. Additional resistance is a short-term 50% level at .6373.

The nearest support is a short-term 50% level at .6177. This is a potential trigger point for an acceleration to the downside.

Daily Swing Chart Technical Forecast

Trader reaction to the long-term Fibonacci level at .6232 is likely to determine the direction of the NZD/USD on Friday.

Bearish Scenario

A sustained move under .6231 will indicate the presence of sellers. The first target is .6177, followed by a main bottom at .6156. This is a potential trigger point for an acceleration into the long-term 50% level at .5990.

Bullish Scenario

A sustained move over .6232 will signal the presence of buyers. This could trigger an intraday rally into a minor pivot at .6286. Overcoming this could extend the rally into a resistance cluster at .6272 – .6273. This is a potential trigger point for an acceleration into .6467.