NZD/USD Forecast: Kiwi Dollar Rises as Investors Look to US NFP Data and Fed Rate Cut Prospects
The New Zealand Dollar (NZD) tops its counterparts on Friday, driving NZD/USD to the vicinity of 0.5870 before closely watched US Nonfarm Payrolls (NFP) data. The risk-on market sentiment, underpinned by surging S&P 500 futures, fuels demand for the Kiwi, with the US Dollar experiencing selling pressure. Investors anticipate the NFP report to indicate modest job growth and a minor rise in unemployment, confirming market expectations for a Federal Reserve rate cut this month. Technical indicators, however, reveal conflicting momentum, with significant resistance around 0.5887 and risk of downside to 0.5800 if bearish indications intensify. KEY LOOKOUTS • Markets are waiting for the release of the August Nonfarm Payrolls report, which is expected to indicate 75K job additions and unemployment at 4.3%. • Weaker labor statistics may support bets on a Federal Reserve rate cut this month. • Higher S&P 500 futures reflect better risk appetite among investors, which supports the New Zealand Dollar. • Strong resistance is around the 20-day EMA at 0.5887 and support at 0.5800 and lower at 0.5730. The New Zealand Dollar rises against the US Dollar today, with NZD/USD trading at around 0.5870 ahead of US Nonfarm Payrolls releases. Market sentiment is still risk-on thanks to elevated S&P 500 futures, supporting demand for risk-sensitive currencies such as the Kiwi. Meanwhile, the US Dollar loses strength ahead of labor market data set to reflect moderate job growth and a slight increase in unemployment, which is supporting hopes for a Federal Reserve rate cut this month. The technical indicators reflect mixed momentum, with resistance at 0.5887 and major support at 0.5800. NZD/USD tests around 0.5870 as the Kiwi leads peers prior to US NFP figures. Risk-on market sentiment and expectations of Fed rate cuts bear on the US Dollar. The key levels to monitor are resistance at 0.5887 and support at 0.5800. • NZD/USD rises to 0.5870 as the New Zealand Dollar leads peers in Friday’s European session. • Risk-on sentiment fuels demand for the Kiwi amid a rise in S&P 500 futures. • US Dollar inches lower before the release of the August Nonfarm Payrolls data, due at 12:30 GMT. • NFP anticipated at 75K job addition, with the Unemployment Rate expected to rise to 4.3%. • Fed rate cut expectations firm up, with markets heavily expecting a policy loosening this month. • Technical resistance anticipated around the 20-day EMA at 0.5887, while RSI remains around 40.00. • Major downside levels are 0.5800, 0.5730, and the psychological support level at 0.5700, with upside potential above 0.6000. The New Zealand Dollar picked up speed on Friday, with NZD/USD rising as investors turned positive ahead of the highly anticipated US Nonfarm Payrolls (NFP) report. Increased risk-on sentiment, underscored by gains in S&P 500 futures, fueled demand for risk-sensitive currencies such as the Kiwi Dollar. In contrast, the US Dollar weakened as market players prepared for new labor market data that could inform expectations around the Federal Reserve’s next move. NZD/USD DAILY CHART PRICE SOURCE: TradingView Friday’s release of NFP is expected to indicate modest growth in jobs accompanied by a slight rise in unemployment, which, if materializes, can further bolster the argument for a rate cut by the Fed during this month. The investors are keenly focused on these announcements because the US labor market statistics will probably determine the mood of the markets and monetary policy path in the coming weeks. TECHNICAL ANALYSIS NZD/USD is meeting resistance close to the 20-day Exponential Moving Average (EMA) level of 0.5887, which continues to dictate the ceiling to rising moves. The 14-day Relative Strength Index (RSI) is close to 40.00, indicating declining bullish power and the danger of new bearish pressure if it continues to decline. On the contrary, a drop below the level of 0.5800 would leave the pair vulnerable to April’s low of 0.5730 as well as the psychological support at 0.5700, and on the flip side, a clear break above 0.6000 would leave the door open for gains to 0.6040 and 0.6100. FORECAST If NZD/USD is able to hold above the 0.5870 levels and cross the psychological level of 0.6000, the pair may pick up bullish momentum. This would hopefully invite fresh buying and set the stage towards June 19 high of 0.6040 and beyond to the September 11 low of 0.6100. A favorable risk-on sentiment and increasing Fed rate cut expectations would prove crucial in triggering this upside action. Conversely, a failure to maintain above near-term support levels could leave the Kiwi vulnerable to further selling pressure. A fall below the Aug 2 low of 0.5800 would indicate further frailty, clearing the way down to April’s low of 0.5730 and the key round-figure support at 0.5700. Stronger-than-anticipated US labour market statistics may drive a USD recovery, suppressing the NZD/USD pair.