NZD/USD moved down to near 0.5730 ahead of the US Nonfarm Payrolls (NFP) data. Market predictions suggest the US added 60,000 new jobs in December. The New Zealand Dollar experienced selling pressure in the unfavorable market climate.
The pair traded 0.37% lower during the European session on Friday. This decline happened as the New Zealand Dollar weakened amid cautious market sentiment.
US Nonfarm Payrolls Expectation
On Friday, the US NFP data was expected to affect the monetary policy outlook of the Federal Reserve. The forecast was for 60,000 new jobs, slightly down from 64,000 in November, and a decrease in unemployment to 4.5%.
The US Dollar held strong with the Dollar Index reaching a four-week high near 99.00. Technical analysis showed NZD/USD declining to near 0.5730, with a bearish outlook due to a Head and Shoulders breakdown.
The 14-day RSI confirmed a loss of upside momentum. The 20-day EMA rolled over to 0.5772, indicating a shift to a corrective phase. Sustained trading below the 20-day EMA could lead to further downside. Alternatively, overcoming this level might support upward movement.
The US Nonfarm Payrolls report for December 2025 has just been released, showing the economy added 110,000 jobs, which is significantly stronger than the 60,000 that was expected. This strong labor data reduces the chances of the Federal Reserve cutting interest rates soon. The US Dollar Index (DXY) has responded by holding firm near its recent high of 99.00.
Bearish Technical Signal For NZD/USD
This fundamental strength confirms the bearish technical signal we have been watching in the NZD/USD. The pair’s drop below the 0.5740 neckline has completed a Head and Shoulders pattern, which points to further declines. We see the next major support level around the 0.5692 mark, which was the high reached back in mid-November of 2025.
For the coming weeks, we should consider buying put options on the NZD/USD pair. This allows us to profit from a continued move lower while clearly defining our maximum risk. We should look to enter these positions on any small rally, as the path of least resistance now appears to be to the downside.
The weakness in the New Zealand Dollar is also being driven by domestic factors. Inflation data from the last quarter of 2025 showed a continued cooling trend, with the annual rate dropping to 3.8%. This gives the Reserve Bank of New Zealand plenty of room to stay on the sidelines, removing a key pillar of support for the currency.
Market positioning further supports a bearish stance on the Kiwi dollar. The latest data from the Commodity Futures Trading Commission (CFTC) shows that large speculators have been increasing their net short positions on the NZD. This indicates that the broader market is already positioned for a weaker New Zealand Dollar.
