NZD/USD: bearish heading towards nonfarm payrolls

NZD/USD was a sell-off from the 0.72 handle and scored a low of 0.7148 over the last couple of overnight sessions as we head over to early Asia. 

Analysts at Westpac explained that the disappointing dairy auction and resurgent US dollar caused the NZD to break below a head-and-shoulders neckline at 0.7220, and that break was sustained yesterday. "The multi-week target is 0.6950, which coincides with the low formed in July."

There were some surprisingly strong service sector data from the US today supporting the greenback while for the next sessions ahead, the key focus is now with the U.S. nonfarm payrolls. "Although non-farm payrolls are difficult to forecast, we note that four pieces of data point to a strong report," explained analysts at Brown Brothers Harriman. " Weekly jobless claims have fallen since August.  The BLS data found about 50k more people than average missed work in August due to the weather.  Most of these should be expected to have returned.  A job availability measure, embedded in a recent consumer confidence report, rose to its best level since 2008.  Reports indicate that the withholding tax (from paychecks) rose 6% in September." Moreover, the analyst at BBH explained that not only is there scope for an upside surprise to the median market guesstimate of 170k, but other details of the report are expected to be constructive, including average hours worked and hourly earnings.

NZD/USD levels

Analysts at Westpac offered the NZD/USD in a 1-3 month:  Vulnerable to breaking below 0.7220 towards 0.6950 if the RBNZ cuts to 1.75% in November and the Fed tightens to 0.625% in December, as we expect. (3 Oct). Meanwhile, with spot trading at 0.7168, we can see next resistance ahead at 0.7169 (Weekly Classic S2), 0.7185 (Hourly 20 EMA), 0.7198 (Yesterday's Low), 0.7209 (Monthly Low) and 0.7209 (Weekly Low). Support below can be found at 0.7168 (Daily Classic S1), 0.7149 (Daily Low), 0.7138 (Daily 100 SMA), 0.7126 (Daily Classic S2) and 0.7118 (Weekly Classic S3).