NZD/USD recovers from year-low, despite strong US GDP data

• The NZD/USD pair bounces from 0.5773 to 0.5807, despite the lack of significant economic data from New Zealand.
• US GDP growth at 4.9% and rising durable goods orders may lead to another Fed rate hike.
• Geopolitical tensions and upcoming economic releases are crucial in the pair’s dynamics.

The NZD/USD rebounded from year-to-date lows of 0.5773 after US economic growth surpassed estimates, potentially justifying further tightening by the US Federal Reserve. USA (Fed). However, the pair made a 180 degree turn and is trading at 0.5807, with a gain of 0.10%.

US economy growth and durable goods orders could prompt further Fed tightening

The US Department of Commerce revealed that the economy in the United States (US) grew 4.9% above estimates of 4.3%, in the advance estimate. Additional data showed that September Durable Goods Orders jumped 4.7%, beating the consensus of 1.7%, and together with the GDP data, could justify the need for a further rate hike from the Fed.

In terms of US labor market data, the US Bureau of Labor Statistics (BLS) released initial jobless claims for the week ending October 21, which increased by 210,000, above forecasts and last week’s 208,000 and 200,000, respectively, showing that the labor market is relaxing.

In New Zealand, a lack of economic data left the NZD/USD pair adrift from market sentiment and US dollar dynamics. On the geopolitical front, Israeli Prime Minister Benjamin Netanyahu’s words suggesting that they are preparing for a ground offensive drove up oil prices, along with safe-haven peers such as the dollar.

Looking ahead to the week, the ANZ Roy organ Consumer Confidence will be published on the New Zealand economic agenda. In the United States, the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE), will be released along with consumer sentiment, reported by the University of Michigan.

NZD/USD Price Analysis: Technical Outlook

The NZD/USD pair has regained the 0.5800 level, after hitting a new year-to-date low of 0.5773. Even though the pair has regained some ground, the downtrend remains intact but could be at risk, if buyers reclaim the 50-day moving average (DMA) at 0.5921. For a bearish continuation, NZD/USD sellers need to break the support at 0.5800, which would expose the year’s low, which once broken, could open the door to test last November’s low at 0.5740, ahead of 0.5700.