USD finds footing pre-NFP after recent soft economic data
RSI divergence flags weakening momentum for NZD bulls
0.5990-0.6000 zone emerges as make-or-break technical level
The Pi network chainlinkNew Zealand Dollar's advance stalled decisively at the 0.6080 barrier during Thursday's session, with follow-through selling pressure emerging on Friday as the US Dollar pared some of its recent losses. This price action shifts market focus back toward the psychologically significant 0.6000 support region.
Market participants appear to be adjusting USD positions ahead of the critical Nonfarm Payrolls release, with consensus estimates pointing toward 130K new jobs created in May. The unemployment rate is expected to hold steady at 4.2%, though any deviation from forecasts could spark volatility across currency markets.
Chart Perspective: Technical Signals Turning Cautious
While the broader uptrend from mid-April remains technically intact, Thursday's rejection at 0.6080 establishes this area as formidable resistance. The 4-hour timeframe reveals concerning signals as price action develops:
The Relative Strength Index displays clear bearish divergence - where price made higher highs while momentum indicators formed lower highs. This classic technical warning often precedes trend reversals or corrections. A daily close beneath the 0.5990-0.6000 confluence (containing both trendline support and recent swing lows) would complete an Evening Star candlestick pattern, potentially triggering broader profit-taking.
Downside targets emerge at 0.5925 (May 22 swing low) and 0.5890 (38.2% Fibonacci retracement of April-May rally). Should buyers defend current levels, resistance zones await at 0.6080 and the year-to-date peak near 0.6145.
Fundamental Backdrop: NFP as Potential Catalyst
Today's US employment report carries heightened importance given recent mixed economic signals. With markets pricing approximately 60% probability of Fed rate cuts by September, payrolls data could either reinforce or challenge current USD positioning. Traders should monitor wage growth figures particularly closely, as persistent inflationary pressures might delay anticipated policy easing.
The New Zealand Dollar continues drawing support from expectations that the RBNZ will maintain restrictive policy longer than peers. However, risk sentiment fluctuations and commodity price movements remain key external drivers for the kiwi.
