NZD/USD hits fresh weekly high around 0.6350s on soft US Dollar after US jobless claims

• NZD/USD bounced at the 20-day EMA and clung to gains at around 0.6350s.
• US Initial Jobless Claims rose more than estimates, flashing signs the labor market is easing.
• NZD/USD Price Analysis: Upward biased, but needs to clear 0.6360, to test 0.6400.

The New Zealand Dollar (NZD) clings to its gains on Thursday, bouncing off the 20-day Exponential Moving Average (EMA) as market sentiment improved due to a worse-than-expected US jobs report. Therefore, the US Dollar (USD) lost traction and weakened against most G10 currencies. At the time of writing, the NZD/USD is trading at 0.6350.

Wall Street finished the penultimate trading day of the year with gains between 1.05% and 2.59%. A light economic calendar left the NZD/USD pair adrift to US Dollar dynamics, which bolstered the New Zealand Dollar. The US Bureau of Labor Statistics (BLS) revealed the Initial Jobless Claims for the week ended on December 24 rose by 225K, in line with expectations, though 9K above the previous week’s record. Continuing claims jumped by 1.7 million in the week that ended on December 17, the highest since early February.

The NZD/USD reacted upwards amidst thin liquidity conditions as the year’s end approached.

Since authorities relaxed its zero-tolerance policy, the jump in Covid-19 cases in China is overwhelming its healthcare system. Also, Italy reported that half of the passengers on two flights from China were Covid-19 positive, spurring a chain reaction from Western countries, imposing tests on people traveling from China.

Elsewhere the US Dollar Index (DXY), a measure of the greenback’s value against a basket of peers, drops 0.49% and exchanges hands at 103.958, undermined by falling US bond yields. The 10-year benchmark note yields 3.826%, down six bps from its opening yield.

NZD/USD Price Analysis: Technical outlook

The daily chart shows the NZD/USD pair as upward biased, though struggling to crack the weekly high of 0.6355. Oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC) began to turn positive, suggesting buyers are moving in. However, if the NZD/USD is poised to fresh weekly highs, it will need to test the 0.6400 figure, followed by the December 13 daily high of 0.6513.