NZD/USD turns lower for the second straight day and drops to a nearly one-month low.
The mixed domestic jobs data and a softer risk tone undermine the risk-sensitive Kiwi.
Break below an ascending trend-line support favours bears amid renewed USD buying.
The NZD/USD pair attracts fresh sellers following an Asian session uptick to the 0.6175 region and drifts into negative territory for the second successive day on Wednesday. Spot prices drop to over a one-month low in the last hour and currently trade just above the 0.6100 round-figure mark, down 0.75% for the day.
The New Zealand Dollar (NZD) weakens in reaction to the mixed domestic employment details, which showed that the jobless rate climbed to 3.6% during the second quarter and offset a larger-than-anticipated rise in the number of employed people. Adding to this, the Labour Cost Index also falls short of market expectations and pushes back against bets for further rate hikes by the Reserve Bank of New Zealand (RBNZ).
Apart from this, a softer risk tone assists the safe-haven US Dollar (USD) to reverse its modest intraday losses and turns out to be another factor driving flows away from the risk-sensitive Kiwi. Despite the fact that Fitch downgraded the US government’s credit rating to AA+ from AAA, rising bets for one more 25 bps rate hike by the Federal Reserve (Fed) act as a tailwind for the Greenback and further weigh on the NZD/USD pair.
From a technical perspective, spot prices have now slipped below support marked by an upward sloping trend-line extending from the YTD low touched on May 31. Moreover, oscillators on the daily chart have again started gaining negative traction and support prospects for an extension of a nearly three-week-old downtrend. That said, bearish traders might still wait for a break below the 0.6100 mark before placing fresh bets.
The NZD/USD pair might then accelerate the fall towards testing the next relevant support near the 0.6065-0.6055 region before eventually dropping to the 0.6000 psychological mark. This is closely followed by the YTD low, around the 0.5985 region, which if broken decisively will set the stage for a further near-term depreciating move.
On the flip side, the immediate hurdle is pegged near the 0.6150 region ahead of the daily swing high, around the 0.6165-0.6170 area. Any subsequent move up is likely to attract fresh sellers near the 0.6200 round-figure mark and remain capped near a technically significant 200-day Simple Moving Average (SMA), around the 0.6225 zone. A sustained strength beyond might shift the bias in favour of bulls and trigger a short-covering rally.
NZD/USD daily chart
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Key levels to watch
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