The New Zealand Dollar (NZD) extended upside movement against the US Dollar (USD) on Friday, increasing the price of NZDUSD to more than 0.7280 ahead of crucial US employment data. The technical bias remains bearish because of a Lower low in the recent downside move.
As of this writing, the pair is being traded near 0.7286. A hurdle can be noted around 0.7295-0.7300, the confluence of horizontal resistance area as well as psychological number as demonstrated in the given below chart. A break and daily closing above the 0.7300 resistance could incite renewed buying interest, validating a move towards the 0.7500 region in the medium term.
On the downside, the pair is likely to find a support around 0.7227, the intraday low of yesterday ahead of 0.7204, the swing low of the recent downside move and then 0.7000, the psychological number. The technical bias will remain bearish as long as the 0.7380 resistance is intact.
ISM Manufacturing Index
Manufacturing activity in the U.S. fell more than expected in August to a seven-month low, according to an industry report released on Thursday. The Institute for Supply Management said its index of manufacturing activity dropped to 49.4 last month from July’s reading of 52.6. That was the worst reading on the index since January of this year and missed expectations for a slight drop to 52.0.
A reading above 50.0 indicates expansion in the manufacturing sector, below indicates contraction. The new orders index also entered contraction, falling to 49.1 in August from 56.9 a month earlier. The employment index moved down to 48.3 last month from the prior 49.4, compared to a forecast for an increase to 49.6.
Considering the overall technical and fundamental outlook, buying the pair on a breakout above the 0.7300 resistance could be a good strategy.