NZD/USD falls back towards 0.5800 as Greenback steps up

• The NZD/USD is falling back into near-term congestion as markets pick up the US Dollar.
• Kiwi traders keeping a look out for Tuesday's NZ labor figures.
• Broad markets are looking to Fed's Wednesday showing.

The NZD/USD is falling back towards 0.5800 as investors broadly turn back into the US Dollar (USD) ahead of the Federal Reserve's (Fed) upcoming rate call on Wednesday. Before that, late Tuesday sees the latest labor and unemployment figures for New Zealand, followed by a speech from Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr.

Broad-market sentiment has turned moderately risk-off, sending the USD higher across the board with the Dollar Index (DXY) gaining around a percent from Tuesday's early low, and the Kiwi is getting pushed back into the 0.5800 handle, keeping the NZD/USD pinned in familiar downside with the pair trading into eleven-month lows.

Markets have priced in a hold on Fed rates this Wednesday, but firm US growth figures and inflation that refuses to abate quick enough are pushing up odds of one more rate hike from the Fed in December to close out the year.

New Zealand: More robust than expected labour market to benefit the NZD – Commerzbank

New Zealand's Q3 Unemployment Rate is expected to tick up from 3.6% to 3.9%, with the 3rd quarter's Employment Change expected to climb 0.4%, compared to Q2's 1.0%.

With NZ labor market data expected to decline slightly, ongoing market concerns about China's wobbly economy, and still-high inflation plaguing the New Zealand domestic economy, the Kiwi isn't expected to find much to rally about.

However, a better-than-expected reading for economic activity figures could see the RBNZ given enough room to further tighten monetary policy, which could bolster the NZD.

NZD/USD Technical Outlook

With the Kiwi trading back into 0.8500, downside technical support is thinning quickly, and the levels to watch will be last week's downswing into 0.5772, and a break beyond this level will see the NZD/USD making a run for last October's trading territory, near 0.5700.

Technical resistance is piling up above current bids, with the 50-day Simple Moving AVerage (SMA) pushing down into the 0.5900 major level, a confluence resistance level. Further beyond that, October's swing high into 0.6050 represents the last major ceiling for any bullish recoveries for the NZD/USD.

NZD/USD Daily Chart

NZD/USD Technical Levels