• Fed's Logan warns that higher interest rates could be needed later this year.
• US ISM Services PMI rose to 54.5 in May, supporting the US Dollar.
• Markets await Friday's US Nonfarm Payrolls report for fresh policy clues.

The NZD/USD pair trades near the 0.5860 region on Thursday, down more than 1% in the day, as the US Dollar (USD) strengthens following hawkish remarks from Federal Reserve (Fed) officials.

Federal Reserve Bank of Dallas President Lorie Logan stated that inflation is taking too long to return to the Fed's 2% target and warned that higher interest rates could be necessary later this year.

Logan added that financial conditions remain accommodative, the labor market is stable, and economic activity continues to show resilience, reinforcing expectations that the Fed may maintain a restrictive policy stance for longer.

The Greenback also remained supported after the latest ISM Services PMI rose to 54.5 in May from 53.6 in April, highlighting the resilience of the US economy and reducing expectations for near-term interest rate cuts.

Meanwhile, investors remain focused on Friday's US Nonfarm Payrolls report for additional clues on the strength of the labor market and the Fed's policy outlook.

Short-term technical analysis:

On the 4-hour chart, NZD/USD trades at 0.5864, maintaining a capped tone as the pair remains below the 100-period Simple Moving Average (SMA) at 0.5892 and the 20-period SMA at 0.5929. The recent slide has driven the Relative Strength Index (RSI) into oversold territory near 27, hinting that bearish pressure dominates for now, even as the risk of a corrective bounce from depressed momentum levels starts to rise.

On the topside, immediate resistance emerges at 0.5866, with additional barriers clustered at 0.5870 and 0.5880, ahead of the 100-period SMA at 0.5892 and the more distant 20-period SMA near 0.5929. On the downside, initial support is seen at 0.5857, where a horizontal level underpins the pair, and a break below this floor would open the door to further weakness despite the already oversold momentum backdrop.

(The technical analysis of this story was written with the help of an AI tool.)