The New Zealand dollar closed lower on Friday after hitting its highest level since April 27 amid the possibility that the Federal Reserve will tighten monetary policy after data showed stronger than expected job growth. non-farm wage earner in the United States in May.
On Friday, NZD/USD settled at 0.6506, down 0.0054 or -0.82%.
In the US, the closely watched Labor Department’s monthly jobs report showed job growth in the country beat economists’ estimates in May, jumping 390,000 jobs, after surging 436,000 jobs revised upward in April.
Economists expected employment to rise by about 325,000 jobs from the 428,000 job addition initially reported the previous month.
Meanwhile, the Labor Department said the unemployment rate remained unchanged at 3.6%. The unemployment rate was expected to drop to 3.5%. The government report also showed that the average hourly wage rose by 0.3%, below forecasts but matching the April figure.
Better-than-expected employment growth indicates the economy is still strong, while falling average hourly wages suggest growth is starting to moderate amid a rebounding labor force.
Daily Swing Chart Technical Analysis
The main trend is up according to the daily swing chart. The trend deepened on Friday when the buyers took the May 5 high at 0.6569. However, the closing price reversal top suggests that momentum may be preparing to shift to the downside. The main trend will turn lower if the sellers exit .6460.
On the upside, the first resistance is a 50% level at .6560, followed by a retracement zone at .6626 to .6722.
On the downside, first support is a long term 50% level at 0.6467. The new short-term range is 0.6217 to 0.6576. If the main trend turns lower, look for a test of its retracement zone at 0.6396 to 0.6354. The main support is a long-term Fibonacci level at 0.6231.
Daily Swing Chart Technical Forecast
Traders’ reaction to 0.6518 early Monday will likely determine the direction of NZD/USD on Monday.
A sustained move below .6518 will indicate the presence of sellers. A trade at 0.6501 will confirm the closing price reversal top, shifting the momentum down. This will likely trigger a quick break between .6467 and .6460.
Breaking out of .6460 will change the main downtrend. This could trigger an acceleration in the short-term retracement zone at 0.6396 to 0.6354.
A sustained move above .6518 will signal the presence of buyers. If this generates enough bullish momentum, look for a retest of the 50% level at 0.6560, followed by the reversal top at 0.6576.
A trade through .6576 will signal the return of buyers with the main retracement zone at .6626 at .6722 the next target area.