NZD/USD climbs back above 0.6200 on US Dollar weakness

• The NZD/USD pair bounces to 0.6207 from a low of 0.6149, buoyed by a weaker US dollar after a disappointing jobs report.
• The US adds 209,000 jobs, below expectations, but the unemployment rate falls to 3.6%. Wage growth remains at 4.4% year-on-year.
• Traders are confident in the Fed’s rate hike at the July meeting, with a probability of 92.4%.
• The Reserve Bank of New Zealand is expected to hold rates at the next meeting after recent hikes.

The pair NZD/USD climbed back above 0.6200 on Friday as the US dollar (USD) weakened on a weaker than expected jobs report in the United States (US), which was expected to be strong after the strong labor market data on Thursday. The NZD/USD pair is trading at 0.6207 after hitting a daily low of 0.6149.

NZD/USD strengthens on US dollar weakness after disappointing US NFP report.

The US Bureau of Labor Statistics (BLS) revealed that the economy added just 209,000 jobs to the economy, as shown in the June Nonfarm Payrolls report. Furthermore, the data showed that the unemployment rate fell from 3.7% in May to 3.6% in June. Notably, median hourly earnings increased from 4.2% to 4.4% year-on-year, indicating that wage growth remains strong.

The NZD/USD pair was volatile after the data, oscillating around the 0.6159-0.6202 range before stabilizing at current exchange rates, as the dollar fell on falling US Treasury yields.

The 10-year US Treasury yield yields 4.02%, down 1.5 points, while the Dollar Index (DXY), a gauge of the dollar’s value against a basket of six currencies, sinks up to 102,438 points, with losses of 0.66%, after staying above 103,000 points during the last four days.

Although the US Non-Farm Payrolls report was weak, traders remain convinced that the US Federal Reserve (Fed) will raise rates by 25 basis points at the July 25-26 meeting, as shows CME’s FedWatch tool. The odds stand at 92.4%, up from 86.8% last week. However, they do not seem convinced that the Fed will raise rates twice, as the Fed dot chart shows.

In New Zealand, next week’s economic agenda will include the Reserve Bank of New Zealand (RBNZ) monetary policy meeting. The RBNZ is expected to keep rates unchanged, after increases of 525 basis points, from the end of 2021.

NZD/USD Price Analysis: Technical Perspective

NZD/USD has a neutral bias, limited to the upside by the 200 day EMA at 0.6221. Once the level is broken, the pair could rally towards the June 16 high at 0.6247, followed by the May 23 high at 0.6302. On the flip side, the NZD/USD pair would initially fall to the 100-day EMA at 0.6186 if it fails to sustain above 0.6200. Next, support levels lie at the 50-day EMA at 0.6166, followed by the 20-day EMA at 0.6156.