NZD/USD recovering to 0.5930 after backslide on hawkish Fed

• The NZD/USD fell on Thursday, but recovered in the midday as the US Dollar takes a breather.
• USD eases pressure and gives the Kiwi a chance to recover Fed-led swoon.
• New Zealand and the US set for Friday PMIs to close out the trading week.

The NZD/USD got knocked lower following a hawkish Fed on Wednesday, tumbling 1.5% before the Kiwi (NZD) managed to find a floor near 0.5895.

The trading week will cap off action with Purchasing Manager Index (PMI) figures for both New Zealand and the US markets.

Fed holds rates, but sees holding longer rate cycle

The Federal Reserve (Fed) held benchmark interest rates at 5.5% on Wednesday, but the US central bank is forecasting that rates will remain higher for longer than previously anticipated. 2024's year-end interest rate is currently expected to be 5.1%, compared to the previously forecast 4.6%.

With the Fed hitting hawkish notes, the US Dollar (USD) climbed across the entire global currency market. Thursday saw the Greenback continue its march until the midday, where currency counterparts found some breathing room and eased back recent losses.

Friday markets will finish up the trading week with NZ and US PMIs, but NZ PMIs are unlikely to drive much market momentum. Most investors will be keeping their eyes turned to the US PMI release, where the manufacturing and services components are anticipated to tick upwards, albeit slightly.

The US Manufacturing PMI component is seen rising to 48.0 from 47.9, while the services sector is expected to rise from 50.5 to 50.6.

NZD/USD technical outlook

The Kiwi-Dollar pairing fell through the 200-hour Simple Moving Average (SMA) early Thursday, slipping to a near-term low of 0.5895. Hourly candles could see the NZD/USD slip back to the 200-hour SMA is bullish momentum falters or Dollar bulls return to the fold.

Daily candlesticks see the Kiwi trading into familiar five-week ranges after getting knocked back from the 34-day Exponential Moving Average (EMA) just above 0.5950.

A sustained bull move will see technical resistance from the 200-day Simple Moving Average (SMA) drifting below the 0.6200 handle, while further downside sees little in the way of support until 2022's late low far below current price action, near 0.5500.

NZD/USD hourly chart

NZD/USD technical levels