NZD/USD recovers from multi-month lows following weak US PMIs


  • NZD/USD rebounded around 0.6085 after bottoming at the lowest since November last week
  • US ISM Services PMI fell to 50.3 in May.
  • S&P Global Composite PMI retreated to 54.3.

 

The NZD/USD traded with gains at the beginning of the week near 0.6070, fueled by poor economic data from the US, which sparked a US Dollar sell-off. In reaction to the data, markets are perceiving a stronger case for the Federal Reserve (Fed) not hiking rates in the upcoming meeting on June 13-14 making the US bond yields decline.

US bond yields decline following weak economic data


The US Institute for Supply Management (ISM) Service PMI came in at 50.3 in May vs the 51.5 expected and decelerated from its previous figure of 51.9. In addition, the S&P Global Composite final estimate for the same month slid to 54.3 vs the 54.5 expected from the last reading of 55.1. Meanwhile, the service sector PMI final revision printed at 54.9 vs the preliminary reading of 55.1.

Following the disappointing data, US bond yields have declined throughout the yield curve. The 10-year bond yield has fallen to 3.69%. Similarly, the 2-year yield stands at 4.48%, while the 5-year yield sits at 3.83%,  which weighs on the US Dollar.


According to the CME FedWatch Tool, investors are currently assigning a 77.10% probability to the Federal Reserve maintaining the target rate at 5.25% and not implementing an interest rate hike in the upcoming June 13-14 meeting. However, it is worth highlighting that the Fed's primary objective of achieving full employment and price stability remains steadfast. As a result, the release of the May Consumer Price Index (CPI) on June 13 will play a crucial role in shaping the FOMC's (Federal Open Market Committee) expectations and considerations for future interest rate decisions and hence impacting the US Dollar price dynamics.

Levels to watch

Technically speaking, the NZD/USD maintains a neutral to a bearish outlook for the short term, as per indicators on the daily chart. The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), despite standing in negative territory, show a loss of momentum, suggesting that sellers seem to have run out of steam.

 
On the upside, upcoming resistance for NZD/USD is seen at the daily high of 0.6085, followed by the psychological mark at 0.6100 and June 2 high around 0.6115. On the other hand, if the Kiwi retakes the downside, immediate support levels are seen at the daily low at 0.6040, followed by the psychological mark at the 0.6000 level and the cycle low at 0.5985.

 

 

NZD/USD

Overview
Today last price 0.6078
Today Daily Change 0.0017
Today Daily Change % 0.28
Today daily open 0.6061
 
Trends
Daily SMA20 0.6181
Daily SMA50 0.6204
Daily SMA100 0.625
Daily SMA200 0.615
 
Levels
Previous Daily High 0.6112
Previous Daily Low 0.6055
Previous Weekly High 0.6112
Previous Weekly Low 0.5985
Previous Monthly High 0.6385
Previous Monthly Low 0.5985
Daily Fibonacci 38.2% 0.6077
Daily Fibonacci 61.8% 0.609
Daily Pivot Point S1 0.604
Daily Pivot Point S2 0.6019
Daily Pivot Point S3 0.5983
Daily Pivot Point R1 0.6097
Daily Pivot Point R2 0.6133
Daily Pivot Point R3 0.6154

 

 

 

 

 

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