• Modest USD strength prompted some intraday selling around NZD/USD on Friday.
• The risk-on impulse capped the safe-haven USD and extended support to the pair.
• Bulls managed to defend 200-day SMA as the focus remains on the US jobs report.

The NZD/USD pair reversed an intraday dip to a three-day low and was last seen trading in the neutral territory, around the 0.6930 region during the early European session.

The pair edged lower through the first half of the trading on Friday and moved further away from the YTD peak, around the 0.7000 psychological mark touched earlier this week. The downtick was sponsored by some follow-through buying around the US dollar, which drew some support from fading hopes for a diplomatic solution to end the war in Ukraine.

Apart from this, growing acceptance that the Fed would adopt a more aggressive policy stance and hike interest rates by 100 bps over the next two meetings to combat high inflation underpinned the buck. That said, a generally positive tone around the equity markets capped the safe-haven greenback and extended support to the perceived riskier kiwi.

Investors also seemed reluctant to place aggressive bets and preferred to wait on the sidelines ahead of the release of the closely-watched US monthly jobs data. This, in turn, assisted the NZD/USD pair to find some support near the technically significant 200-day SMA, warranting some caution before positioning for any meaningful corrective slide.

Nevertheless, the focus remains glued to the US NFP report, due later during the early North American session, which will play a key role in influencing the Fed's monetary policy outlook. This, along with developments surrounding the Russia-Ukraine saga, will drive the USD demand and produce some meaningful trading opportunities around the NZD/USD pair.

Technical levels to watch