NZD/USD: Bearish setup intact, eyes US payrolls release

• The corrective rally in NZD/USD seems to have run out of steam.
• The bias remains bearish as per the technical studies.
• The pair may find acceptance below 0.70 if the US payrolls and wage growth figure topples estimates.

The NZD/USD is now flashing red, having run into offers at a session high of 0.7053 earlier today.

The drop to 0.7035 indicates the corrective rally from the weekly low of 0.6985 may have run out of steam. Moreover, the outlook remains bearish as indicated by the descending 5-day moving average (MA) and the 10-day MA.

Focus on US data

The one-farm payrolls number, due at 12:30 GMT, is expected to show the US economy added 192K jobs in April vs. 103K job additions in March. Meanwhile, the jobless rate is seen falling further to 4 percent from 4.1 percent and the average hourly earnings are expected to have risen 0.2 percent in April vs 0.3 percent in March.

Above-Forecast average hourly earnings could trigger speculation the Fed would hike rates at a faster pace and therefore lead to broad-based USD rally. In this case, NZD/USD could drop well below the recent low of 0.6985.

On the other hand, the corrective rally in the NZD/USD will likely gather pace if the US data disappoints market expectations.

NZD/USD Technical Levels

A break below the descending 5-day moving average (MA) of 0.7022 would open the doors to re-test of 0.70 (psychological support) and 0.6985 (recent low). On the higher side, resistance at 0.7059 (descending 10-day MA, if breached, could yield a rally to 0.7096 (resistance on 4-hour chart) and 0.7132 (resistance on 1-hour chart).