NZD/USD advances slightly above 0.5900, at two-week highs ahead of NFP

• NZD/USD moves higher for the third consecutive day amid the prevailing selling trend around the USD.
• Expectations that the Fed will not raise rates again and the positive risk tone weaken the USD.
• The pair remains on track to snap a three-week losing streak ahead of the NFP report.

The NZD/USD pair attracts some buying for the third day in a row on Friday and breaks back above the 0.5900 level during the first half of the European session. The pair is trading just above two-week highs reached on Thursday, and now awaits further momentum from monthly US jobs data.

The publication of the NFP report is scheduled for the first hours of the American session and should provide new clues about the next move of the Federal Reserve (Fed). This, in turn, will play a key role in the near-term price dynamics of the US Dollar (USD) and provide a significant boost to the NZD/USD pair.

Ahead of key data, expectations that the Fed is nearing the end of its monetary policy tightening campaign continue to drag down US Treasury yields. This, together with market optimism, which is reflected in a positive tone in the stock markets, weakens the USD and acts as a tailwind for the NZD/USD pair.

Meanwhile, a private sector survey showed that business activity in China’s services sector expanded at a slightly faster pace in October and turns out to be another factor benefiting antipodean currencies, including the New Zealand dollar (NZD). . This, however, does nothing to alleviate market concerns about a slowdown in the world’s second largest economy.

Aside from this, growing acceptance that the Reserve Bank of New Zealand (RBNZ) will keep its policy rate unchanged in November, reinforced by weak national employment numbers earlier this week, could cap the NZD/USD pair. USD. This, in turn, justifies caution before opening new bullish positions and positioning yourself for any new move higher.

Therefore, strong follow-through buying is needed to confirm that the NZD/USD pair has formed a short-term bottom. However, the pair remains on track to post strong weekly gains and break a three-week losing streak to the lowest level since November 2022, around the 0.5775-0.5770 zone it touched last Thursday.

Technical levels to monitor