New Zealand Dollar eases from 0.5660 as US Dollar recovers

• After reaching an intraday high of 0.5658, NZD/USD eases to around 0.5630 while retaining gains.
• US NFP figures become the next focus for investors.
• The US economic outlook has become less clear following the Democrats’ capture of both the House and the Senate.

At around 0.5630, NZD/USD remains 0.2% higher during Thursday’s European session, having pulled back from an intraday peak of 0.5658. The retreat leaves the New Zealand Dollar (NZD) with half of its earlier gains against the US Dollar (USD).

A recovery in the US Dollar, which has moved into positive territory, is weighing on the Kiwi pair. Markets are now turning their attention to October’s United States (US) Nonfarm Payrolls (NFP) report, due on Friday.

Having rebounded sharply from a retest of the previous day’s monthly low of 101.01, the US Dollar Index (DXY) stands near 101.60, up 0.1% at the time of writing. The index tracks the Greenback against six major currencies.

For investors seeking further indications of the Federal Reserve’s (Fed) monetary policy outlook, the US NFP release will be a key focus.

Fed rate rise remains in play despite TD’s forecast for modest October job gains

Only limited job creation is expected in October’s US employment report, according to TD Securities, whose economists expect nonfarm payrolls to “remain subdued at 40k after job gains moderated to 29k in September.” Underlying momentum may nevertheless be firmer than the headline suggests: the economists observe 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 sees scope for a stronger outcome, stating that “risks to our payrolls forecast are to the upside,” and 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 assessment is that “a hike in December is likely.”

Before its recovery, the US Dollar had lagged as the Democrats’ victory in the US midterm elections cast uncertainty over the economic outlook.

US political tensions threaten to weigh on the Dollar into 2027

Over the medium term, US politics could present another obstacle for the Dollar, in the view of ING analysts. Their assessment is that “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.” A further 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 analysts’ view that mounting political tensions may increasingly undermine the currency’s appeal.

NZD/USD Retains Bearish Bias Below Short-Term EMA

With NZD/USD at 0.5631 on the daily chart, trading below the 20-day exponential moving average (EMA) of 0.5646 leaves the near-term outlook bearish. This nearby dynamic resistance continues to constrain the pair, implying that rallies may struggle until it is overcome. Meanwhile, the Relative Strength Index (RSI) is recovering towards the mid-40s, pointing to downside pressure that is easing but remains modest.

A daily close above the first resistance level, the 20-day EMA at 0.5646, would be required to temper the bearish outlook and create scope for a corrective rise. Below the current price, the supplied indicators identify no clear nearby support. Traders may therefore turn to recent chart lows to locate potential demand zones, while remaining mindful of the prevailing downside bias for as long as NZD/USD stays below its short-term EMA.

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