The NZD/USD pair posted a mild rebound on Thursday, recovering part of Wednesday’s sharp decline that dragged the Kiwi to its lowest level since April 9. The pair is holding above the 0.5600 level in early European trading, though further gains may be limited as persistent US Dollar (USD) strength keeps buyers cautious ahead of the delayed US Nonfarm Payrolls (NFP) data.
Falling Wedge Formation Supports a Tentative Bullish Outlook
Technically, the pair’s two-month downtrend has taken shape within two converging trendlines, forming a bullish falling wedge on the daily chart. This pattern often suggests the potential for a bullish reversal.
However, the NZD/USD pair has repeatedly failed to sustain moves above the 50-day Simple Moving Average (SMA), and momentum indicators remain weak. These factors highlight the need for caution before positioning for a deeper recovery — especially with high-impact US data on deck.
Key Levels to Watch
Upside:
- Immediate resistance sits at 0.5665–0.5670, the upper boundary of the falling wedge.
- A breakout above this zone could fuel a short-covering rally toward 0.5700.
- Beyond that, the 50-day SMA near 0.5765 becomes the next key hurdle, and a clear move above it would signal a potential bottom.
Downside:
- A firm break below 0.5600 would expose the wedge support at 0.5570–0.5565.
- A decisive drop beneath this zone would confirm renewed bearish momentum, likely dragging the pair beneath 0.5500 toward the multi-year lows seen in April.
- Such a move would also extend the broader four-month downtrend.
Market Focus Turns to US NFP Data
With the September NFP report finally set for release after the prolonged US government shutdown, traders are likely to avoid aggressive positioning. The labor-market numbers could dictate short-term direction for USD pairs and determine whether NZD/USD can build on its recovery or resume its downward trajectory.