NZD/USD Price Analysis: Bears gain ground recover after PCE readings of the US

The NZD/USD consolidates below the 20-day SMA of 0.5973 towards the 0.5950 area, tallying a second consecutive day of losses.
Core PCE rose in July to 3.3%, as the markets expected.
Fed’s tightening expectations eased somewhat, but they remain high—eyes on NFPs.

On Thursday, the NZD/USD saw losses, driven by robust economic data, making the USD recover against most of its rivals. During the week, the US economy has been sending mixed, and the markets eagerly await Friday’s Nonfarm Payrolls report to continue placing their bets on the next Federal Reserve’s (Fed) decisions.

The Core Personal Consumption Expenditures (PCE), one of the Fed’s preferred gauges for inflation, rose to 3.3% YoY in July, matching the market’s expectations. In addition, Initial Jobless Claims for the week ending on August 25 came in at 228,000, lower than the 235,000 expected and the previous figures of 232,000. Other data showed that the Chicago PMI increased to 48.7, bearing both the expected and previous figures.

Reacting to the strong PCE and Claims figures, the USD, measured by the DXY index, rose to 103.70, seeing more than 0.50% gains, while the US Treasury yields recovered somewhat, but they are still in decline.

Regarding the Federal Reserve (Fed) expectations, the World Interest Rates Probabilities tool suggests that markets the odds of a 25 bps increase stand at 50%, down from 70% on Tuesday, for the November meeting. However, those bets will likely change after Friday’s Nonfarm Payrolls release, as a hot reading may push investors to bet on higher chances of a hike.

NZD/USD Levels to watch

Upon analyzing the daily chart, a neutral to bearish trend becomes evident for NZD/USD, with the bears are seen gradually taking control. The Relative Strength Index (RSI) reveals a selling momentum with a downward slope below its middle point, while the Moving Average Convergence (MACD) lays out flat green bars. Plus, the pair is below the 20,100 and 200-day Simple Moving Averages (SMAs), indicating that the sellers dominate the broader perspective, and the buyers need to increase their efforts.

Support levels: 0.5940, 0.5930, 0.5900.

Resistance levels: 0.5973 (20-day SMA), 0.6000, 0.6030.