NZD/USD remains depressed near 0.7220 area, downside seems limited ahead of NFP
- NZD/USD witnessed some selling on Friday and snapped two consecutive days of the winning streak.
- The pullback lacked any catalyst and could be solely attributed to some repositioning ahead of NFP.
- The prevalent USD selling bias, upbeat market mood should help limit the downside for the major.
The NZD/USD pair remained on the defensive through the first half of the European session and was last seen trading around the 0.7220-15 region, just a few pips above daily lows.
The pair struggled to capitalize on this week's goodish rebound from the 0.7115 region, or the lowest level since April 14 and witnessed some selling on the last day of the week. This marked the first day of a negative move in the previous three sessions, though a combination of factors helped limit any deeper losses.
Firming expectations that the Fed will keep interest rates low for a longer period dragged the US dollar to one-week lows on Friday. Apart from this, the underlying bullish tone in the equity markets further undermined the safe-haven greenback. This, in turn, extended some support to the perceived riskier kiwi.
Moreover, investors also seemed reluctant to place any aggressive bets, rather preferred to wait on the sideline ahead of the closely-watched US monthly jobs report. The headline NFP is anticipated to show another month of blockbuster growth in the US labour market and show that the economy added nearly one million jobs in April.
The unemployment rate is also expected to edge lower to 5.8% from 6.0% in March. The upbeat readings, however, might not be enough to shift the Fed rate expectations or act as a source of any meaningful USD strength. This, in turn, supports prospects for the emergence of some dip-buying around the NZD/USD pair.
Technical levels to watch