Forecast for the NZD/USD Pair

The NZD/USD Pair from an Economic Perspective

New Zealand Dollar Falls After Weak Jobs Report

The New Zealand dollar fell to around 0.587 U.S. dollars, retreating from a two-month high, after a weaker-than-expected jobs report raised doubts about the extent to which interest rates will rise this year.

New Zealand’s unemployment rate rose to 5.6% in the second quarter—its highest level since the third quarter of 2015 exceeding expectations of 5.4%, indicating increasing stagnation in the labor market.

Although employment rose by 0.5% from the previous quarter, exceeding expectations of a 0.1% increase, this rise was largely driven by a sharp increase in the labor force participation rate.

Meanwhile, annual wage growth remained weak at 2.0%, suggesting that wage pressures are unlikely to fuel inflation and reducing the likelihood of a sharp tightening of monetary policy.

Nevertheless, markets continued to anticipate an interest rate hike this coming September, after the Reserve Bank of New Zealand indicated last month that further monetary tightening would likely be needed to withdraw monetary stimulus and bring inflation under control.

The New Zealand Dollar from a Technical Perspective

The New Zealand dollar pair rebounded from resistance levels around 0.5910 during this week’s trading, which are close to the daily downtrend line.

We expect to see some pullbacks for the pair in the coming period under the influence of a negative MACD divergence.

We are targeting 0.5770 as an initial target, followed by 0.5700, and finally 0.5630.

This scenario would be invalidated if the pair breaks above the downtrend levels.