NZD/USD Price Analysis: Bears gain more ground after US ISM PMI figures.

• The NZD/USD pair unraveled the daily gains and eased back to 0.5870.
• The US ISM Services PMI unexpectedly accelerated in August and shows the resilience of the US economy.
• TheFocus is on the Fed’s Beige Book, due to be released later in the session.

In Tuesday’s session, the NZD/USD pair reversed trajectory and cleared out daily gains, taking the pair to a high above 0.5900 and settling near 0.5870. The pair’s trajectory is mainly driven by the strength of the USD, which gained interest following strong US ISM PMI numbers, which bolstered the case for one more hike from the Federal Reserve in this tightening cycle.

The Federal Reserve’s (Fed) hawkish bets received a boost after the release of the ISM services PMIs for August, which revealed that the sector expanded. The index reached 54.5, above the expected 52.5 and the previous 52.7. Both Chairman Powell and several other Fed officials have stated that upcoming decisions will be made cautiously, looking at incoming data, so strong economic numbers could push the Fed to further tighten monetary policy in the face of inflation risks. .

In line with this, US bond yields are seeing strong gains across the board. The 2-year yield rose as much as 5% to 2.40%, while the 5- and 10-year yields shot up to 4.42% and 4.28%, with daily gains of 2.73% and 2.18%. In this sense, investors appear to be dumping bonds because they are betting on higher odds of another Fed hike this cycle, and CME’s FedWatch tool indicates that the odds of a 25 basis point (bp) hike in the November meeting, they rose again to 44%.

NZD/USD Levels to Watch

Analyzing the daily chart, the NZD/USD presents a short-term bearish outlook. The RSI and Moving Average Convergence Divergence (MACD) remain in negative territory, with the RSI positioned below its midline and sloping south. Furthermore, the MACD shows red bars, further supporting the intensification of the bearish momentum. Furthermore, the pair is sitting below the 20,100 and 200-day SMAs, which points to prevailing bear strength in the broader context as buyers face a challenging situation.

Support levels: 0.5858, 0.5830, 0.5800.

Resistance levels: 0.5900, 0.5940 (20-day SMA), 0.5980.

NZD/USD Daily Chart