NZD/USD rises above 0.6200 ahead of US employment data

• NZD/USD jumped more than 1% above 0.6200 and threatens the 200-day SMA at 0.6222.
• The US reported mixed low-tier economic data.
• All eyes are on US employment data to be released on Thursday and Friday.

On Monday, the NZD/USD gained significant ground after three consecutive days of losses jumping above the 0.6200 threshold. However, bulls need the acceptance of the 200-day Simple Moving Average at 0.6222 to continue advancing.

The United States released low-tier economic data. The US Chicago PMI for July came in slightly below expectations at 42.8 vs 43, and the Dallas Manufacturing index declined in the same month but at a somewhat lower rate than anticipated, at -20 vs -26.3. 

 That being said, the main highlight of the week is the Non-Farm Payrolls (NFP) report to be released on Friday. The consensus expects job creation to have decreased in July and for hourly earnings and the unemployment rate to remain stable. It’s noteworthy that Chair Powell stated last week that the next interest rate will be made solely based on new data, so the direction of the US labour market will be crucial for investors. On Tuesday, the JOLTs Job Opening will be released and on Wednesday, the economic calendar will feature the ADP employment change, followed by fresh Jobless claims data on Thursday. 

In terms of the next Federal Reserve next monetary policy decisions, tightening expectations remain steady. According to World Interest Rate Possibilities (WIRP) tool, the markets are currently pricing in a 20% chance of a 25 bps hike in the September meeting and top out near  40% in the November meeting.

On the Kiwi’s side, investors will see New Zealand’s labour market data, which will be released in early Wednesday’s session.

NZD/USD Levels to watch

The technical outlook for the NZD/USD, as per the daily chart, is neutral to bullish, as the indicators are recovering but still weak. The Relative Strength Index (RSI) stands below just above the midline with a positive slope, while the Moving Average Convergence Divergence (MACD) still prints red bars. On the other hand, the pair is below the 20 and 200-day Simple Moving Averages (SMA) but above the 100-day SMA, implying that the bulls remain in control on a broader scale.

Resistance levels: 0.6222 (200-day SMA),0.6230 (20-day SMA), 0.6250.
Support levels: 0.6200 (100-day SMA), 0.6180, 0.6150.

NZD/USD Daily chart