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NZD/USD Faces Downward Pressure Amid Trump’s Tariff Threats and US Economic Data
Economic
Summary:
The NZD/USD remains under pressure, trading near 0.5880 in Tuesday's Asian session amid ongoing concerns over US tariffs and global trade.
Sell
PENDINGNZDUSD
EXP
0.59000
Entry Price
0.57400
TP
0.59500
SL
0.58477 -0.00325 -0.55%
--
Point
PENDING
0.57400
TP
CLOSING
0.59000
Entry Price
0.59500
SL
The New Zealand Dollar (NZD) continued to struggle during the Asian trading session on Tuesday, with the NZD/USD pair trading near 0.5880 as it grapples with various headwinds. Chief among these is the ongoing uncertainty surrounding global trade relations, exacerbated by US President-elect Donald Trump’s tariff threats, which have cast a shadow over the Kiwi dollar. Investors are also keeping a keen eye on upcoming economic data from the United States, including the JOLTs Job Openings report for October, set for release later today, as well as speeches from Federal Reserve officials Adriana Kugler and Austan Goolsbee.
The persistent pressure on the NZD/USD can be traced to a broader set of economic concerns. As the trade war between the United States and its global partners continues to intensify, Trump’s threats of additional tariffs have become a central theme in financial markets. On the eve of assuming office, the President-elect proposed a blanket 25% tariff on all imports from Mexico and Canada, coupled with a further 10% duty on goods from China. With China being a significant trading partner for New Zealand, this tariff escalation raises fears of a global trade war that could have far-reaching implications for global growth, particularly in emerging markets and commodity-dependent economies like New Zealand. As a result, the NZD has faced a persistent downturn in recent trading sessions.
While the external factors weigh heavily on the NZD, US economic data has been mixed, leading to a somewhat cautious outlook for the US dollar. On Monday, the Institute for Supply Management (ISM) released its manufacturing PMI for November, showing a surprising uptick to 48.4 from the previous reading of 46.5. Although this signals that the manufacturing sector in the US is still in contraction territory, the data beat expectations, which had forecasted a more modest increase to 47.5. This slight improvement suggests that the US economy is showing some resilience, even amid global economic slowdowns.
At the same time, investors are awaiting more comprehensive data on the US labor market, with the highly anticipated Nonfarm Payrolls (NFP) report due on Friday. Market consensus is predicting an addition of 195,000 jobs in November, a figure that will provide further clues on the strength of the labor market and the broader US economic outlook. Strong NFP data could influence the Federal Reserve’s stance on interest rates, potentially giving the US dollar a boost if it supports expectations of further tightening from the central bank.
Indeed, Federal Reserve officials have signaled that the need to continue lowering interest rates into 2025 remains a priority, but there is no definitive commitment to a rate cut at the upcoming policy meeting later this month. Fed Governor Christopher Waller mentioned on Monday that while he is inclined to vote for a rate reduction when the Fed meets in December, data released before then will be crucial in shaping the final decision. This hawkish tone from the Fed, combined with recent signs of resilience in US manufacturing, suggests that market participants may not see significant changes to US monetary policy in the short term.
Technical Analysis
From a technical standpoint, the NZD/USD currency pair remains under pressure, with a bearish bias continuing to dominate price action. The pair has been trading below key resistance levels, and there is growing momentum for further declines. As of now, the NZD/USD is testing the 50-period exponential moving average (EMA50), which is positioned as a significant support level near 0.5865. Should the price break below this level, the next support targets lie around 0.5850, with a potential move toward 0.5740 in the medium term.
A continued bearish trend will be contingent upon the price remaining below 0.5935. If the NZD/USD fails to reclaim this level, the outlook for the pair remains negative, and further declines could be expected. However, should the price breach the 0.5935 resistance, the pair could see a corrective rally toward the 0.6020 region, which would mark a shift in the near-term trend.
The anticipated trading range for today is between support at 0.5820 and resistance at 0.5910, with the overall trend forecasted to remain bearish unless a reversal occurs above the 0.5935 mark.
TRADE RECOMMENDATION
SELL NZDUSD
ENTRY PRICE: 0.5900
STOP LOSS: 0.5950
TAKE PROFIT: 0.5740
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