NZD/USD Price Forecast: Softens below 0.5900 while remaining in near-term consolidation

The NZD/USD currency pair experiences a decline to below 0.5900 during early European trading hours on Monday, as the US Dollar strengthens. Traders are optimistic about a potential rate hike from the US Federal Reserve at the September meeting, following a stronger-than-expected US labor report. The US Bureau of Labor Statistics announced that Nonfarm Payrolls increased by 162K in August, exceeding expectations of 56K.

The Unemployment Rate remained unchanged at 4.1%. Fed funds futures indicate a 60% chance of a rate increase. A dovish move by the Reserve Bank of New Zealand (RBNZ) could weaken the New Zealand Dollar. Last week, the RBNZ raised the Official Cash Rate by 25 basis points to 2.75%. RBNZ Governor Anna Breman hinted at further increases, but emphasized assessing their impact before taking action.

Analysts at Commerzbank noted the move as expected, and reiterated that a gradual withdrawal of monetary stimulus was necessary to bring inflation back to the target range. The NZD/USD pair is currently trading between structural bands, holding above the 100-day moving average while trading below the Bollinger middle band, suggesting a consolidative near-term trend.

The next resistance level is found around 0.5910, with a potential upside target at 0.5985. On the downside, the 100-day moving average at 0.5845 serves as the first support, followed by the Bollinger lower band near 0.5830. A break below this level may expose the July 27 low of 0.5771.