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A Potential Bearish Pullback Could Target Key Moving Averages
Forex
Economic
Summary:
Should the price fail to reclaim higher levels, this could solidify bearish dominance in the short term.
Sell
CLOSEDNZDUSD
End Time
0.60402
Entry Price
0.59700
TP
0.60800
SL
0.60110 +0.00016 +0.03%
248
Points
Profit
0.59700
TP
0.60154
CLOSING
0.60402
Entry Price
0.60800
SL
U.S. Non-Farm Payrolls (NFP) data for May revealed the addition of 139,000 jobs in the non-agricultural sector, surpassing market expectations of 130,000. Alongside this solid print, the Unemployment Rate remained unchanged at 4.2%, and Average Hourly Earnings held steady at 3.9% year-over-year—both readings coming in stronger than anticipated, reinforcing the view of a labor market that, while moderating, still shows underlying resilience.
Adding to the list of upbeat surprises, the latest NFIB Small Business Optimism Index posted its first month-on-month improvement since December, marking a potential turning point after several months of deterioration. This uptick could reflect an early sign of stabilization in small business sentiment—a key component of the broader U.S. economy.
Meanwhile, the New York Fed’s Survey of Consumer Expectations (SCE) indicated a decline in inflation expectations across the one-, three-, and five-year timeframes. Although this cooling trend is generally positive, especially from a monetary policy standpoint, the survey also revealed a notable dip in household sentiment. Consumers reported a weaker perception of both current and future financial conditions, suggesting that confidence remains fragile amid mixed economic signals.
This uncertainty was further highlighted by the ISM Services PMI for May, which slipped to 49.9—falling below the neutral 50 level for the first time since December and missing consensus estimates of 52. The reading points to a slight contraction in the services sector, which comprises the majority of U.S. economic activity.
A breakdown of the report revealed persistent inflationary pressures, with the Prices Paid Index jumping from 65.1 to 68.7, signaling elevated input costs. However, the Employment Index rose from 49 to 50.7, hinting at modest recovery in service-sector hiring and offering a counterbalance to the otherwise soft print.
In light of these developments, Chicago Fed President Austan Goolsbee adopted a cautious tone, flagging downside risks stemming from potential trade friction under former President Donald Trump’s proposed tariff agenda. These policy shifts, he warned, are being increasingly considered within the Fed's broader risk framework due to their potential to disrupt the economic recovery.
Further geopolitical nuance emerged as U.S. officials hinted at the possible easing of restrictions on certain high-tech exports in exchange for China lifting curbs on rare earth shipments—materials vital to the energy, defense, and technology industries. This more constructive tone in U.S.-China trade talks provided a lift to the New Zealand dollar, often viewed as a China-sensitive proxy due to New Zealand’s close trade ties with the Asian giant.
Additionally, growing speculation that the Reserve Bank of New Zealand (RBNZ) may slow the pace of interest rate cuts added to the NZD’s positive momentum. While the RBNZ revised its economic forecasts downward compared to its February statement and acknowledged significant global uncertainties, Westpac Senior Economist Michael Gordon noted the central bank’s surprisingly cautious stance on the timing and magnitude of future OCR reductions—further supporting the currency.
Technical Analysis
NZD/USD has encountered strong resistance around the 0.6055 level, with multiple bearish rejections observed in this zone. The failure to establish a clear break above has triggered a series of bearish closes, suggesting the potential for a corrective move toward the 100- and 200-period moving averages on the 4-hour chart, located at 0.5958 and 0.5934, respectively. Additionally, the 0.5970 region, which previously acted as resistance, may now serve as short-term support, making it a likely target for any pullback.
From a momentum standpoint, the Relative Strength Index (RSI) currently stands at 52, signaling neutrality but also hinting at a possible shift in control toward bearish sentiment. Should the price fail to reclaim higher levels, this could solidify bearish dominance in the short term. Conversely, a decisive break above resistance may reignite bullish momentum, especially considering the lack of recent lower lows, which continues to support the broader uptrend.
Trading Recommendations
Trading direction: Sell
Entry price: 0.6040
Target price: 0.5970
Stop loss: 0.6080
Validity: Jun 20, 2025 15:00:00
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