The NZD/USD currency pair is currently facing increased selling pressure, reflecting a mild decline in global risk sentiment. Although the U.S. dollar remains near a multi-week low, it isn’t providing much support for the pair. Traders are now focused on the upcoming U.S. Nonfarm Payrolls (NFP) report, which could offer insights into the Federal Reserve’s prospective interest rate adjustments.
During Friday’s Asian session, the NZD/USD encountered fresh sellers, retracing some of Thursday’s modest gains and reaching a daily low of around 0.5860. With the NFP report on the horizon, traders are hoping for meaningful direction to guide their positions as the weekend approaches.
The U.S. monthly jobs data is anticipated to shed light on the Fed’s path concerning interest rate cuts, which is significant for the dollar’s performance and, consequently, the NZD/USD pair as well. In the meantime, decreasing U.S. Treasury bond yields have left dollar bulls tentative, although expectations of a less dovish Fed and declines in global equity markets are providing some support to the dollar, exerting additional pressure on riskier currencies, including the New Zealand dollar.
Market sentiment is being influenced by speculations that new government policies may lead to rising inflation, which could prompt the Fed to halt its rate cuts. Additionally, hawkish comments from Federal Open Market Committee members indicate a more cautious approach from the central bank amid ongoing geopolitical uncertainties. This backdrop, coupled with expectations of aggressive policy easing from the Reserve Bank of New Zealand, could further undermine the NZD/USD pair.
Technically, the recent price movements suggest a bearish consolidation phase over the last few weeks. The absence of significant buying interest and negative momentum indicators propose a continued bearish outlook for the pair, implying that any recovery attempts may not hold and could quickly revert to selling opportunities.
