Kiwi dollar struggles amid USD strength and light domestic data

Daily Currency Update

The New Zealand Dollar (NZD) came under renewed pressure on Tuesday, with the NZD/USD pair declining by 0.8% to trade around 0.5850 during the European session. The move follows broad-based strength in the US Dollar (USD) as markets reopen after the Labor Day holiday in the United States. A lack of domestic economic data this week leaves the Kiwi vulnerable to external drivers, particularly shifts in global risk sentiment and expectations surrounding the Federal Reserve’s policy outlook. From a technical perspective, NZD/USD faced firm resistance near the 20-day Exponential Moving Average (EMA) around 0.5900, where the pair met selling pressure earlier in the session. This rejection reinforces the near-term bearish outlook, with the pair also remaining below its 50-day EMA, further supporting downside momentum. Attention now turns to a critical support zone between 0.5800 and 0.5850. A clear break below this area could trigger further losses, exposing the April 11 low at 0.5730, followed by the psychological level of 0.5700. These levels are likely to act as key downside targets if bearish momentum accelerates. On the upside, a recovery above the psychological barrier at 0.6000 would be required to shift the near-term bias back toward the bulls. In such a scenario, the pair could look to test the June 19 high at 0.6040, followed by the September 11 low at 0.6100, now serving as resistance after a prior breakdown. Momentum indicators are currently skewed to the downside, and with limited domestic drivers, NZD/USD is expected to take its cues from broader market sentiment and US data releases in the days ahead.