NZD/USD rebounds amid market optimism, heads for weekly loss

• With a positive opening on Wall Street, the NZD/USD pair rises 0.57% to 0.5907, partially offsetting fears of a global economic slowdown.
• The US dollar weakens after hitting six-month highs, providing a boost to the NZD/USD pair in the absence of US economic data.
• Key economic indicators such as inflation in the US and retail card spending in New Zealand will be released next week.

The New Zealand Dollar (NZD) rebounds against the US Dollar (USD), but remains set to end the week with losses. Fears of a global economic slowdown led by Europe and China dampened investor sentiment during the European session, but Wall Street opened higher. This boosted NZD/USD, which is trading at 0.5907, with a gain of 0.57%.

NZD advances against weakened USD, but concerns about global economic slowdown and upcoming data keep traders cautious

The dollar continues to weaken after the data pushed the dollar to a six-month high, according to the Dollar Index, at 105.057. However, the lack of economic data on the US agenda and the drop in US Treasury yields weighed on the Dollar, a tailwind for the NZD/USD pair.

During the week, US data was positive for the Dollar, showing the resilience of the economy. Business activity in the services segment rebounded, while the labor market remains tight, as shown by initial claims for unemployment benefits. However, the NZD/USD pair was boosted by Federal Reserve officials taking a more cautious stance, particularly regional Fed chairs Collins, Williams and Bostic. In contrast, Chicago Fed President Austan Goolsbee took a more neutral stance, while Lorie Logan of the Dallas Fed said the U.S. central bank should rely on data, but added that more is needed. rate hikes to curb inflation.

Meanwhile, the kiwi has been influenced by market sentiment and negative data from China. As business activity in the latter country suffered, despite Chinese authorities stimulating the economy, financial markets did not buy that story, as the Chinese stock market headed for weekly losses.

Apart from this, the NZD/USD pair would pick up direction based on next week’s data. In the United States, data on inflation, retail sales, unemployment benefit claims, Industrial Production and consumer sentiment from the University of Michigan will be published. In New Zealand, retail card spending will be published.

NZD/USD Price Analysis: Technical Outlook

The pair’s recovery above the September 6 high at 0.5904 could be considered a bullish correction, but the overall trend remains bearish. To change the bias, buyers must recapture the September 1 high at 0.6015, which would put the 50-day moving average (DMA) at 0.6080 into play. If NZD/USD sees a daily close below 0.5904, sellers could push Kiwi/US Dollar towards weekly lows at 0.5859 before challenging 0.5800.