Anna 
The NZD/USD pair has experienced a resurgence in buying interest, bouncing from around 0.6050 to approximately 0.6080 during the London session. However, the short-term outlook for the New Zealand Dollar remains bearish, lingering near a two-month low following a sell-off triggered by robust United States Nonfarm Payrolls (NFP) data for January. The optimistic NFP figures tempered expectations of early rate cuts by the Federal Reserve (Fed).
In the European session, S&P500 futures recorded notable losses, reflecting a decline in market participants’ risk appetite. The US Dollar Index (DXY) traded steadily above 104.00 as investors awaited the release of the US ISM Services PMI for January at 15:00 GMT. The Services PMI, a key indicator representing two-thirds of the economy, is anticipated to show growth, rising from 50.6 in December to 52.0.
Looking ahead, investors are keenly awaiting the Q4 Employment data scheduled for Tuesday on the New Zealand Dollar front. Projections suggest a sharp increase in the Unemployment Rate to 4.3% from 3.9% in the third quarter of 2023. The Labor Cost Index is expected to maintain a steady pace of 0.8%. Adverse labor market data could prompt Reserve Bank of New Zealand (RBNZ) policymakers to contemplate early rate cuts.
Technically, NZD/USD has broken down from the Bearish Flag chart pattern on a daily timeframe, signaling a potential continuation of the downside trend. The 20-day Exponential Moving Average (EMA) near 0.6137 remains a significant resistance level for New Zealand Dollar bulls.
The 14-period Relative Strength Index (RSI) has shifted into the bearish range of 20.00-40.00, indicating the initiation of a bearish momentum.
Further downside pressure may materialize if the asset falls below the immediate low of 0.6050, exposing it to a June 8 low at 0.6026, followed by the psychological support level of 0.6000.
Conversely, a sustained recovery above the January 24 high at 0.6150 could propel the NZD/USD pair towards the January 31 high at 0.6075 and the January 16 high at 0.6208.
