The NZDUSD pair has rallied thanks to the Federal Reserve’s soft comments and a weaker-than-expected Non-Farm Payroll (NFP) report. Federal Reserve’s Kashkari and others are hinting at a possible interest rate cut in September. The market is now expecting 60 basis points (bps) of rate cuts by the end of the year, up from 35 bps before the NFP report. If upcoming data stays positive, Fed Chair Powell might indicate a rate cut at the Jackson Hole Symposium. The ISM Services PMI showed a new high in prices, and the upcoming US Jobless Claims figures could provide more info on the labor market. Strong data might lead the market to rethink its expectations, while weak data would strengthen the current outlook, which could affect the USD.

New Zealand Economic Outlook

In New Zealand, the labor market report met expectations, suggesting that the Reserve Bank of New Zealand (RBNZ) is likely to cut rates by around 40 bps by the end of the year. There’s an 87% chance of a cut at the next meeting. Technical analysis of NZDUSD shows it bounced off the 0.5850 support zone on the daily chart, aiming for the 0.6020 level. On the 4-hour and 1-hour charts, upward trendlines support bullish momentum, while sellers may look for chances to profit from declines. We are still awaiting US Jobless Claims figures for further insights. The US dollar is weakening after Federal Reserve officials suggested rate cuts, following last week’s disappointing jobs report, which altered market expectations. The August 1st, 2025, Non-Farm Payroll report showed just 155,000 new jobs, falling short of expectations and leading traders to anticipate Fed easing. Now, all eyes are on the Jackson Hole Symposium later this month for clearer signals from Fed Chair Powell. The market now sees a nearly 90% chance of a September rate cut, a big change from just weeks ago. However, we should note that the Core PCE inflation rate for June 2025 was still high at 2.9%, making the decision a bit complex.

Potential Rate Cuts

On the flip side, we expect the Reserve Bank of New Zealand to lower rates. New Zealand’s Q2 2025 inflation data dropped to 3.1%, giving the RBNZ a solid reason to ease policy next week. This could limit how much the NZDUSD rises since both currencies might weaken at the same time. From a trading viewpoint, the bounce from the 0.5850 support level is significant. Any dips towards the upward trendline, currently around 0.5940, could be opportunities to enter long positions. The main target for this bullish move is the downward trendline resistance near the 0.6020 level. However, traders should keep in mind that the 0.6020 resistance level has been a significant hurdle since early 2024. This point is seen as a strong area to start bearish positions, like buying put options, with a risk limit set just above that trendline. A rejection here would refocus attention on the crucial 0.5850 support level. The US Jobless Claims data released later today is the next immediate factor for potential volatility. Over the past year, claims numbers have frequently surprised the market, leading to sharp short-term movements. A surprisingly low number today could challenge the weak labor market narrative and trigger a swift pullback in the pair. Create your live VT Markets account and start trading now.

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