NZD/USD drops below 0.5950 as the Jackson Hole Symposium gets underway

The NZD/USD faced selling pressure on Thursday, driven by a stronger USD and higher US yields. On the Kiwi’s front, it trades as the worst performer on the session while New Zealand’s economic calendar remains empty. 

On the data front, the USD reported that weekly Jobless Claims from the week ending on August 18 came in at 230,000, lower than the expected previous 240,000, pointing out that the labour market is holding firm. In addition, Durable Goods from July came in soft, dropping by 5.2%, higher than the 4% expected.

As a reaction, the 2-year yield reemerged above 5%, accompanied by the 5-year and 10-year rates making strides towards approximately 4.38% and 4.21%, while the US DXY index rose to 103.80.

Markets focus is set on Friday’s speech from Jerome Powell, where investors will look for further clues on forward guidance on the Federal Reserve's (Fed) next moves. Meanwhile, Thomas Barking sent mixed messages on Thursday, stating that the bank has “probably already done enough” and that if inflation comes down sooner, the Fed may cut rates quicker. However, Powell’s remarks probably weigh regarding the market’s expectations on the bank’s next moves and according to the CME FedWatch tool, markets still bet on nearly 35% odds of a 25 basis point (bps) hike in the November meeting.

NZD/USD Levels to watch

Observing the daily chart, the outlook tilts in favour of the bears, but they still have some work to do. The Relative Strength Index (RSI) reveals a bearish bias with a downward slope below its middle point, while the Moving Average Convergence (MACD) lays flat red bars.On the other hand, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), indicating a challenging position for the buyers in the bigger picture, as the bears remain in command.

Support levels: 0.5900, 0.5870, 0.5850.

Resistance levels: 0.5950, 0.5980, 0.6000. 

NZD/USD Daily chart