According to our NZD/USD technical analysis, the NZD/USD currency pair encountered robust buying demand around the 0.6120 level following a decline during the European trading session.

The New Zealand Dollar (Kiwi) is exhibiting a V-shaped recovery as the US Dollar faces scrutiny ahead of the release of the United States Q2 Employment Cost Index and Core Personal Consumption Expenditure (PCE) Price Index data, scheduled for publication at 12:30 GMT.

During the London session, S&P 500 futures recorded substantial gains, reflecting a notable recovery in market participants’ risk appetite. 

On Thursday, US equities experienced considerable downward pressure due to the optimistic performance of the United States economy in the April-June quarter, which alleviated concerns about a potential interest rate hike by the Federal Reserve (Fed) in September.

The US Q2 Gross Domestic Product (GDP) and June’s Durable Goods Orders data both showed strong results, signalling a solid momentum in consumer spending. Additionally, last week’s jobless claims remained low, indicating that firms’ employment programs are sustaining their momentum.

Moving forward, investors will closely monitor the Fed’s preferred inflation gauge. However, its impact is anticipated to be limited as Federal Reserve officials are likely to place greater emphasis on the July Personal Consumption Expenditures (PCE) data while making policy decisions for September. Analysts at BBH (Brown Brothers Harriman) predict that the headline PCE is expected to be at 3.0% year-on-year compared to 3.8% in May, while the core PCE is projected to be at 4.2% year-on-year versus 4.6% in May.

New Zealand Dollar investors will be closely monitoring the release of Q2 Employment data, scheduled for Wednesday. New Zealand’s jobless rate has consistently remained at record lows. If there are signs of loosening labour market conditions, it could provide room for the Reserve Bank of New Zealand (RBNZ) to keep interest rates unchanged at 5.5%.

NZD/USD Technical analysis

The NZD/USD currency pair has been experiencing significant movements on the intraday chart, with the current price at 0.6157 showing signs of breaching the intraday high at 0.61829. This development could potentially provide the bulls with more strength to retest yesterday’s high at 0.62738.

Analyzing the technical indicators, we find that there are 16 sell signals, 8 neutral signals, and only 1 buy signal. This suggests that there is currently a bearish bias in the market sentiment. However, the oscillators present a more optimistic view, with 3 sell signals, 1 neutral signal, and 7 buy signals, indicating a potential reversal in the near future.

Looking at the moving averages, the picture remains bearish, with 13 sell signals and just 1 neutral signal, without any buy signals to counteract the prevailing trend. This further supports the idea that the bearish momentum might still have an upper hand in the short term.

On the other hand, the MACD reading of 0.00045 is relatively small, indicating that there might be some weakening of the bearish momentum. This could be a potential signal for a reversal or consolidation in the near future.

The Relative Strength Index (RSI) currently stands at 44.71, which falls in the neutral territory. It suggests that the market is neither oversold nor overbought at the moment, giving some room for price movements in either direction.

Overall, the current price action and technical indicators paint a mixed picture for the NZD/USD pair. While the breach of the intraday high could embolden the bulls and lead to a retest of yesterday’s high, the prevailing sell signals from the indicators and moving averages signal caution.