NZDUSD has been in a steady decline since the start of the year. Yesterday, the pair saw a local rebound but struggled to challenge the 200-daily moving average which acts as a local resistance since late last week. On Wednesday, the kiwi struggles for direction, and a mild bullish bias is seen at the start of the European session.  

Of note, the pair was nearly unfazed by fresh economic data out of New Zealand. According to the official report, the unemployment rate declined to 4.0% in the fourth quarter versus 4.1% previously and 4.2% expected. The employment change, meanwhile, was flat on a quarterly basis, while analysts expected a rise by 0.3%. Average hourly earnings increased 0.1%, much below forecasts for +0.5% and +0.6% previously.  

The question now is when the pair will hit the bottom, with the kiwi registering fresh early-December lows around 0.6450 on Tuesday. As the New Zealand currency is sensitive to any changes in the sentiment both towards risk assets and commodities, there is a possibility that the pair will remain under the selling pressure for now, as risk aversion could reemerge at any point. 

Besides, oil prices struggle to initiate a steady recovery, remaining close to more than one-year lows despite some shallow recovery attempts on Wednesday. The API data showed that US crude oil inventories increased by over 4 million barrels last week versus the expected 3 million barrels gain. If the official report by the EIA confirms bearish figures, Brent may lose the current modest upside impetus and get back to the negative territory. In this scenario, the kiwi may give up its intraday gains and decline below 0.6475. On the upside, once above the mentioned moving average, NZDUSD will target the 0.6530 area first and then the 0.6550 level will come into focus. 

Later in the week, the pair will be affected by the key US jobs data due on Friday. If the numbers come on the strong side, the US dollar may catch a bid across the board, which will be negative for the kiwi. Should the pair fail to hold above the 100-daily moving average once again, it will likely refresh two-month lows in the near term. 


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