NZD/USD dropped to around 0.5730 ahead of the US Nonfarm Payrolls (NFP) data. Expectations are that the US added 60,000 jobs in December. The New Zealand Dollar faced selling pressure due to a tough market environment. During Friday’s European session, the pair was down by 0.37% as the New Zealand Dollar weakened due to cautious market sentiment.

US Nonfarm Payrolls Expectations

On Friday, the US NFP data was anticipated to influence the Federal Reserve’s monetary policy. The forecast was for 60,000 new jobs, slightly less than the 64,000 reported in November, with unemployment expected to drop to 4.5%. The US Dollar remained strong, with the Dollar Index hitting a four-week high around 99.00. Technical analysis indicated a decline in NZD/USD towards 0.5730, with a bearish outlook driven by a Head and Shoulders pattern. The 14-day RSI noted a decrease in upward momentum. The 20-day EMA fell to 0.5772, suggesting a shift to a corrective phase. If trading stays below the 20-day EMA, we could see further declines. However, breaking above this level might support upward movement. The US Nonfarm Payrolls report for December 2025 has just been released, showing an addition of 110,000 jobs, much stronger than the expected 60,000. This robust labor data makes it less likely for the Federal Reserve to cut interest rates soon. The US Dollar Index (DXY) has stayed strong near its recent high of 99.00.

Bearish Technical Signal For NZD/USD

This strong economic data supports the bearish technical signal we have observed in NZD/USD. The pair’s drop below the 0.5740 neckline has completed a Head and Shoulders pattern, indicating further declines. The next major support level is around 0.5692, which was the high in mid-November 2025. In the weeks ahead, we may want to buy put options on the NZD/USD pair. This strategy allows us to profit from a further decline while clearly defining our maximum risk. Enter these positions on any small rally, as the trend seems to lead downward. The weakness of the New Zealand Dollar is also influenced by domestic factors. Recent inflation data for the last quarter of 2025 showed a continuing cooling trend, with the annual rate falling to 3.8%. This gives the Reserve Bank of New Zealand the flexibility to stay on the sidelines, which removes crucial support for the currency. Market positioning also supports a bearish outlook on the Kiwi dollar. Recent data from the Commodity Futures Trading Commission (CFTC) indicates that large speculators are increasing their net short positions on the NZD. This shows that the broader market is already preparing for a weaker New Zealand Dollar. Create your live VT Markets account and start trading now.

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