0.5660: New Zealand Dollar pulls back as US Dollar recovers ground

• 0.5630 remains within reach for NZD/USD. The pair retains gains despite pulling back from its intraday peak of 0.5658.
• US NFP figures become the next focus for investors.
• The US economic outlook has become more uncertain following Democrats’ takeover of both the House and the Senate.

NZD/USD retains a 0.2% gain near 0.5630. During Thursday’s European session, the New Zealand Dollar (NZD) surrenders half its initial advance against the US Dollar (USD), retreating from an intraday peak of 0.5658.

A recovery in the US Dollar, which has moved into positive territory, is pulling the Kiwi pair lower. Markets are now turning to Friday’s release of United States (US) Nonfarm Payrolls (NFP) figures for October.

At the time of writing, a 0.1% advance puts the US Dollar Index (DXY) near 101.60. The index, which tracks the Greenback against six major currencies, has rebounded sharply after retesting the previous day’s monthly low of 101.01.

For investors assessing the Federal Reserve’s (Fed) monetary policy outlook, the US NFP release will provide fresh signals and draw close scrutiny.

40k October payrolls forecast: TD sees Fed hike risks persisting

Modest hiring is likely to feature in October’s US employment report, according to TD Securities. Its economists expect nonfarm payrolls to “remain subdued at 40k after job gains moderated to 29k in September.” The headline may understate underlying momentum, they suggest, noting that “despite the subdued, below-consensus print, our forecast would be within the range of breakeven job gains and result in an increase in the three-month moving average,” TD also highlights that “risks to our payrolls forecast are to the upside,” warning that “seasonal factors could reverse again more than expected and lead to a stronger print.” With “underlying activity in the economy robust and inflation risks still prominent,” the bank’s conclusion is that “a hike in December is likely.”

Earlier US Dollar weakness reflected uncertainty over the economic outlook following the Democrats’ victory in the US midterm elections.

2027 political tensions cloud US Dollar outlook

US politics could add to medium-term pressure on the Dollar, according to analysts at ING. In their view, “the dollar could see a little more weakness into 2027, however, if an emboldened Democratic Party takes greater issue with Republican policy, including deregulation and the AI build-out.” Another concern is that “the potential for a prolonged government shutdown in mid-2027 adds to the case for a weaker dollar next summer,” ING says. This supports the bank’s assessment that mounting political tensions may increasingly undermine the currency’s appeal.

0.5646 EMA Caps NZD/USD: Technical Analysis

At 0.5631 on the daily chart, NZD/USD retains a bearish short-term outlook. Spot remains below the 20-day exponential moving average (EMA) of 0.5646, a nearby dynamic ceiling likely to constrain rebounds while the pair trades beneath it. Although the Relative Strength Index (RSI) is recovering towards the mid-40s, it points to downside pressure that is easing but remains modest.

The 20-day EMA at 0.5646 marks the first resistance level. A daily close above it would be required to soften the bearish bias and allow scope for a corrective rise. Below current prices, the supplied indicators identify no clear nearby support. Traders may therefore consult recent chart lows for possible demand zones, while recognising that the downside bias persists as long as NZD/USD remains below its short-term EMA.

(The technical analysis of this story was written with the help of an AI tool. Know more.)