The New Zealand Dollar (NZD) extended its recovery against the US Dollar (USD) on Thursday, with NZD/USD trading near 0.5825–0.5830 during Asian hours, just shy of its weekly high. The pair has advanced for five consecutive sessions, rebounding from last week’s multi-month low as a softer USD continues to drive flows into the risk-sensitive Kiwi.
Fed rate cut bets weigh on the Dollar
The US Dollar Index (DXY) struggled to sustain its rebound from a one-week low, with traders focused on expectations that the Federal Reserve (Fed) will cut interest rates twice before year-end. The outlook was reinforced by Wednesday’s ADP private-sector jobs report, which showed employment falling by 32,000 in September—the steepest drop since March 2023. August figures were also revised lower to reflect a 3,000 job loss instead of growth.
The weak labor data overshadowed a modest improvement in the ISM manufacturing PMI, which ticked up from 48.7 to 49.1 in September but still signaled contraction for a seventh straight month. The dovish Fed outlook has left the USD under pressure, boosting NZD/USD momentum.
Risk tone supports Kiwi, RBNZ outlook caps upside
Market sentiment remains broadly positive despite the partial US government shutdown, which investors expect to have limited economic fallout. Equity markets in the US and Asia have maintained a constructive tone, weighing on safe-haven demand for the dollar and favoring higher-yielding, risk-linked currencies like the Kiwi.
However, expectations that the Reserve Bank of New Zealand (RBNZ) could cut rates again in the coming months may limit the upside. Traders remain cautious about how much more room NZD/USD has to rally without fresh catalysts.
Technical outlook: key test at 200-day SMA
From a technical perspective, NZD/USD faces immediate resistance near the 200-day Simple Moving Average (SMA) at 0.5840. A decisive break above this level would confirm a bottoming pattern and open the door toward further gains. On the downside, support lies around 0.5800, with a failure to hold this zone risking a pullback toward recent lows.
Near-term direction will likely hinge on Fed officials’ speeches, as the government shutdown could delay this week’s scheduled US macro releases, including Thursday’s jobless claims report.
