- NZD/USD climbs to a fresh weekly high near 0.5700 as easing global trade war fears boost risk sentiment.
- The US Dollar attempts a recovery, supported by stronger-than-expected US ADP Employment data for January.
- New Zealand's economy remains vulnerable to potential fallout from the ongoing US-China trade tensions.
The NZD/USD pair climbs to a fresh weekly high near 0.5700 in Wednesday's North American session, as the US Dollar (USD) remains under pressure due to easing concerns over a global trade war. Market sentiment suggests that the trade conflict will remain largely between the United States (US) and China, following China's retaliatory tariffs on select US imports in response to President Donald Trump's 10% levy on all Chinese goods.
The US Dollar Index (DXY), which measures the Greenback's value against six major currencies, falls to a new weekly low near 107.40. However, the USD finds some support after the release of stronger-than-expected US ADP Employment Change data, showing that the private sector added 183K jobs in January - well above the 150K forecast and the prior revised figure of 176K (up from 122K).
Meanwhile, the outlook for the New Zealand Dollar (NZD) remains uncertain, as the US-China trade war's economic impact is expected to affect New Zealand, a key trading partner of China. On the monetary policy front, investors anticipate the Reserve Bank of New Zealand (RBNZ) will continue cutting its cash rate to counter the risk of inflation falling below its 2% target.
Technical Outlook: NZD/USD Still Faces Bearish Pressure
NZD/USD has rebounded strongly from the 0.5500 support zone on the weekly timeframe. However, the broader outlook remains bearish, as the 20-week Exponential Moving Average (EMA) near 0.5800 continues to trend downward.
The 14-week Relative Strength Index (RSI) attempts to recover into the neutral 40.00-60.00 range. A failure to sustain this move could trigger renewed selling pressure.
- Support Levels: A break below the 13-year low of 0.5470 could push the pair toward key psychological levels at 0.5400 and 0.5300.
- Resistance Levels: A decisive move above the November 29 high of 0.5930 could open the door to the November 15 high of 0.5970 and the key 0.6000 threshold.
