NZD/USD drops from its day’s high of 0.5658, but is still higher at around 0.5630.
Investors shift their focus to the US NFP data.
Democrats taking control of both the House and the Senate has clouded the US economic outlook.
The New Zealand Dollar (NZD) gives up half of its early gains against the US Dollar (USD) on Thursday. In the European trade, the NZD/USD pair retreats from day’s high of 0.5658, but is still 0.2% higher to near 0.5630.
The Kiwi pair falls back as the US Dollar regains ground and turns positive, with financial markets shifting their focus to the United States (US) Nonfarm Payrolls (NFP) data for October, which is scheduled for Friday.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher to near 101.60. The USD Index bounced back strongly after revisiting the monthly low of 101.01 posted the previous day.
Investors will pay close attention to the US NFP data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
Fed hike risks stay live as TD looks for subdued October jobs print
According to TD Securities, October’s US employment report is likely to show only modest job creation, with economists looking for nonfarm payrolls to “remain subdued at 40k after job gains moderated to 29k in September.” They note that, “despite the subdued, below-consensus print, our forecast would be within the range of breakeven job gains and result in an increase in the three-month moving average,” suggesting underlying momentum is not as weak as the headline figure implies. TD also flags that “risks to our payrolls forecast are to the upside,” cautioning that “seasonal factors could reverse again more than expected and lead to a stronger print.” Against a backdrop of “underlying activity in the economy robust and inflation risks still prominent,” the bank concludes that “a hike in December is likely.”
The US Dollar had been underperforming as the victory of Democrats in US midterm elections has clouded the economic outlook.
Dollar outlook darkens on US political frictions into 2027
Analysts at ING suggest that the US political backdrop could become an additional headwind for the Dollar over the medium term. They argue that “the dollar could see a little more weakness into 2027, however, if an emboldened Democratic Party takes greater issue with Republican policy, including deregulation and the AI build-out.” ING adds that “the potential for a prolonged government shutdown in mid-2027 adds to the case for a weaker dollar next summer,” reinforcing their view that rising political frictions may increasingly weigh on the currency’s appeal.
NZD/USD Technical Analysis
In the daily chart, NZD/USD trades at 0.5631, keeping a bearish near-term bias as spot holds beneath the 20-day exponential moving average (EMA) at 0.5646. The pair remains capped by this nearby dynamic barrier, suggesting rallies are likely to struggle while price stays under it, even as the Relative Strength Index (RSI) recovers toward the mid-40s, hinting at easing but still modest downside pressure.
On the topside, initial resistance is located at the 20-day EMA at 0.5646; a daily close above this level would be needed to ease the current bearish tone and open room for a corrective advance. With no clear nearby support levels derived from the provided indicators below the market, traders may look to recent lows on the price chart itself for potential demand zones, while respecting the prevailing downside bias as long as NZD/USD trades under its short-term EMA.
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