NZDUSD surges to two-day highs above 0.5900 amid a soft USD

• NZDUSD extends its daily gains above 0.5900 following an upbeat US NFP report.
• The United States economy added more than 260K jobs, beating estimates, but wages increased, adding to inflationary pressures.
• The US Dollar remains offered, despite printing a solid employment report, down 1.45% as shown by the US Dollar Index.

The NZDUSD advances and pierces the 50-day Exponential Moving Average (EMA) following the release of upbeat US employment data, while wages rose steadily, which would not deter the US Federal Reserve from tightening monetary policy conditions. At the time of writing, the NZDUSD is trading at 0.5902.

US Dollar remains heavy following October’s US employment situation

The US Dollar continues to weaken, even though the US jobs report was better than expected, with the Nonfarm Payrolls report for the last month exceeding estimates of 200K, increased by 261K. Even though the figures were solid, they came below September’s upward revision to 315K. Of note is that Average Hourly Earnings stood steadily at around 4.7%, as predicted, but lower than the previous month’s 5% jump.

Regarding the Unemployment Rate, it jumped as the Federal Reserve wanted, from 3.5% in September to 3.7% in October.

The Federal Reserve would continue to tighten conditions given October’s labor market figures. Albeit Jerome Powell and Co. revealed that they would slow the pace of interest-rate increases, they would look for the next week’s Consumer Price Index (CPI) for October, alongside the University of Michigan (UoM) Consumer sentiment and inflation expectations.

NZDUSD Market’s reaction

On the US Nonfarm Payrolls release, the NZDUSD edged towards the 0.5800 figure, beneath the confluence of the 50 and 100-hour Exponential Moving Averages (EMAs), before rallying towards fresh two-day highs at around 0.5900, hurdling on its way north, the R1 and R2 daily pivot levels, but shy of the weekly high at 0.5941.

The Relative Strength Index (RSI) is pushing higher towards overbought conditions, though it remains short of reaching the 80 level, used by most traders as the most-extreme overbought condition when an asset is in a strong uptrend. Nevertheless, caution is warranted as the major approaches the R3 daily pivot at 0.5920, opening the door for NZD buyers to book profits in the event of a pullback.