NZD/USD Price Forecast: Holds steady near 0.6030; moves little after Chinese PMI

NZD/USD struggles to attract follow-through buying amid a modest USD uptick on Thursday.
The better-than-expected China’s Services PMI fail to impress bull or provide any impetus.
The technical setup suggests that the path of least resistance for spot prices is to the upside.

Haresh Menghani FXStreet

The NZD/USD pair trades with a positive bias for the second straight day, though it remains below the 0.6050 level through the Asian session on Thursday amid a modest US Dollar (USD) uptick. Spot prices hold steady around the 0.6030 region and move little following the release of China's Caixin Services PMI, which rose to 51.1 in May from 50.7 in the previous month.

From a technical perspective, the recent move up along a multi-week-old ascending channel points to a well-established short-term uptrend. Moreover, oscillators on hourly/daily charts are holding comfortably in positive territory and are still away from being in the overbought zone. This, in turn, suggests that the path of least resistance for the NZD/USD pair is to the upside.

However, it will be prudent to wait for some follow-through buying beyond the 0.6050 hurdle – representing the 61.8% Fibonacci retracement level of the September 2024-April 2025 downfall – before positioning for additional gains. The subsequent move up could lift the NZD/USD pair to the ascending channel resistance, around the 0.6080 area, en route to the 0.6100 round figure.

On the flip side, dips below the 0.6000 psychological mark might still be seen as a buying opportunity and remain limited near the lower boundary of the aforementioned trend channel, currently pegged around the 0.5955-0.5950 region. The latter coincides with the 100-period Simple Moving Average (SMA) on the 4-hour chart and should act as a pivotal point for the NZD/USD pair.

A convincing break below will negate the near-term positive outlook and prompt aggressive selling, paving the way for some meaningful corrective decline from the year-to-date touched on Tuesday.

NZD/USD 4-hour chart

Economic Indicator

Caixin Services PMI

The Caixin Services Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s services sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for CNY.

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