NZD/USD: back below the 0.69 handle, does it still have legs?

• NZD/USD dropped back below key support below the 0.6890 level.
• US data a key driver for the greenback.
• FOMC a non-event.

Currently, NZD/USD is trading at 0.6888, up 0.02% on the day, having posted a daily high at 0.6896 and low at 0.6883.NZD/USD was an outperformer overnight, still enjoying the bid after the surprise jobs data. As a recap of the jobs data, courtesy of analysts at Westpac:

• The unemployment rate fell to a nine-year low of 4.6% in the September quarter, slightly better than we and the market expected.
• Employment growth and labour force participation were very strong, but these are noisy on a quarterly basis and may have been affected by recent survey changes.
• Labour cost inflation remains very subdued, outside of the care workers’ equal pay settlement.
• The jobs market has strengthened over recent years, but it’s not clear that it has moved into tight territory yet.

NZD/USD rallied from 0.6840 territories to 0.6930 highs, giving some gains back but still holding above 0.6880 and above the 4hr 10 SMA. The U.S. dollar was volatile but ended the US session +0.3% in the DXY. The FOMC turned out to be a non-event in terms of guidance, but there seemed to be enough in there to keep the Fed on the map in December for a rate hike, underpinning the strength in the greenback. 

Forex today: a volatile session with plenty to digest, DXY up +0.3%

The US data was also a key driver overnight.

Economic Wrap

"US private sector payrolls (ADP) rose 235k in Oct (vs 200k expected), still somewhat distorted by the hurricanes. ISM manufacturing activity slipped to 58.7 (vs 59.5 expected) – still elevated, considering September’s 60.8 was a 13-year high," explained analysts at Westpac.

NZD/USD levels

The bird made its mark in the last moments of October above a key milestone, in the short term recovery at least, with the closest support at where the FXStreet Technical Confluences Indicator shows where the daily 23.6% Fibo level was located, 0.6845. The bird did drop back below 0.6899 and a 38.2% fibo meeting the 200 hourly sma at 0.6890. 0.6936 is a key target as the 61.8% Fibo on the daily sticks. However, on a full-on correction/reversal, the bulls have a lot of legwork to do to get anywhere near out of the bearish territory and only at 0.7080 and 0.7120 levels might there be any conviction in a reversal.