Bullish view
- Buy the NZD/USD pair and set a take-profit at 0.6117.
- Add a stop-loss at 0.5900.
- Timeline:1-2 days.
Bearish view
- Sell the NZD/USD pair and set a take-profit at 0.5900.
- Add a stop-loss at 0.6117.
The NZD/USD exchange rate wavered on Thursday morning as traders focused on the latest jobs numbers from New Zealand and the United States. It was trading at 0.6000, down from the year-to-date high of 0.6090.
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New Zealand and US Jobs Data
The NZD/USD pair retreated after New Zealand’s statistics agency published the latest jobs numbers, which will help the Reserve Bank of New Zealand (RBNZ) when making its next interest rate decision.
The report showed that the country’s unemployment rate rose slightly from 5.3% in the third quarter of last year to 5.4%. The participation rate rose from 70.3% to 70.5%, while the labor cost index rose 2%.
These numbers mean that the labor market is improving as the economy continues recovering. One reason for the recovery is the Reserve Bank of New Zealand, which has embraced a more dovish tone. The RBNZ slashed interest rates by 0.25% in the last meeting to 2.25%, much lower than the pandemic high of 5.5%. Analysts expect the bank will now hold rates in the current level for a while.
The NZD/USD pair retreated after a report by ADP showed that the US labor market deteriorated in January as it added just 22k jobs. It also downgraded its December estimate. The US will release the latest initial jobless claims data later today.
Meanwhile, traders are reacting to the ongoing geopolitical issues now that talks between the US and Iran have stalled. As such, there is a possibility that the US will attack Iran in the coming days or weeks.
NZD/USD Technical Analysis
The daily timeframe chart shows that the NZD/USD exchange rate has been in a strong rally in the past few weeks, moving from a low of 0.5580 in November to a high of 0.6095. It has recently pulled back slightly to trade at the key support level at 0.6000.
The pair remains above all moving averages and is in the process of forming a bullish flag pattern. This pattern is made up of a vertical line and some consolidation. It often leads to a strong bullish breakout over time.
Therefore, the NZD to USD pair will likely remain in this range today and then resume the uptrend, potentially to last year's high of 0.6117.