The New Zealand Dollar (NZD) fell sharply to its lowest level in two months against the US Dollar (USD) on Friday, with NZD/USD trading at 0.5791 as of the latest update. This decline was triggered by a stronger-than-expected US Nonfarm Payrolls (NFP) report, which showed the US economy added 172,000 jobs in May, surpassing market expectations of 85,000 and following an upwardly revised gain of 179,000 in April. The US Unemployment Rate remained steady at 4.3%, while annual wage growth eased to 3.4% from 3.6% [1].
The robust US labor market data reinforced expectations that the Federal Reserve may keep interest rates higher for longer, or potentially raise them, which supported the US Dollar and weighed on the NZD. The cautious market mood further limited demand for the New Zealand Dollar [1].
Technical analysis indicates that NZD/USD remains in a bearish short-term trend, trading below both the 20-period Simple Moving Average (SMA) at 0.5871 and the 100-period SMA at 0.5882. The Relative Strength Index (RSI) is near oversold territory at 23, suggesting that while sellers are in control, the downside could become more vulnerable to corrective rebounds. Immediate resistance levels are noted at 0.5802, 0.5813, and 0.5843, with support at 0.5790. A break below this support could lead to further declines [1].
Looking ahead, market participants are expected to closely monitor the upcoming US Consumer Price Index (CPI) report and additional labor data, as well as New Zealand's release of the Business NZ Performance of Manufacturing Index (PMI) next week [1].
CONCLUSION
The New Zealand Dollar's sharp decline to a two-month low was driven by strong US jobs data, which bolstered the US Dollar and heightened expectations for prolonged higher US interest rates. Technical indicators suggest continued bearish pressure on NZD/USD, with upcoming economic releases likely to influence future market direction.