NZD/USD drops to the 0.6310s as China’s manufacturing activity slows

• NZD/USD retraces after hitting 0.6370, as investors’ sentiment remains upbeat.
• Weaker than expected, China’s PMIs would likely hurt the NZD/USD climbing prospects to the 0.6400 area.
• IMF’s Georgieva:” Global economy faces a tougher year than 2022.”

The New Zealand Dollar (NZD) retraces from two-week highs around 0.6370s vs. the USD Dollar (USD) and stumbles to 0.6310s amidst a dull North American session, with US financial markets closed on the observance of new year’s eve. Hence, the NZD/USD drops 0.42% after hitting a daily high of 0.6345, trading at 0.6318.

European equities finished with gains, courtesy of an improvement in market mood. An absent New Zealand and United States (US) economic docket keep most G8 currency pairs within familiar ranges ahead of a pack worldwide economic calendar. Nevertheless, worst than expected, China’s PMIs revealed by the National Bureau of Statistics (NBS) show a gloomy outlook for the second-largest economy in the world. Figures came at 47.0 from 48.0 in November, its most significant drop since the early days of the pandemic.

That said, the NZD/USD pair edged lower, while the US Dollar Indexa gauge of the greenback’s performance against six currencies, advanced 0.14% to 103.63, rebounding at around six-month lows hit during the last week at 103.38.

Aside from this, the International Monetary Fund (IMF) director Kristalina Georgieva said the global economy faces “a tougher year than the year we leave behind.” Georgieva added that 1/3 of the global economy would hit a recession, impacted mainly by the three largest economies, the US, EU, and China, which “are all slowing down simultaneously.”

NZD/USD Price Analysis: Technical outlook

From a daily chart perspective, the NZD/USD pair remains upward biased, though headed for consolidation, as the 20-day Exponential Moving Average (EMA) at 0.6308 acts like a magnet, dragging the exchange rate toward its price level. Oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC), aim towards their mid-line, suggesting that buying pressure is easing. But if the NZD/USD pair remains above 0.6300, that could pave the way toward higher prices.

Therefore, the NZD/USD first resistance would be 0.6400. Break above would expose the August 12 daily high of 0.64668, followed by 0.6500.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.