NZDUSD maintains gains over 0.58 despite a small USD fall; attention focuses on NFP data

New buying activity emerges near 0.5755 for the NZDUSD on Friday, reversing the previous day's drop to a weekly low. Throughout the early European session, the pair has maintained a bid tone and is currently trading just over the 0.5700 round-figure mark at the day's high.

The US Dollar appears to have halted its post-FOMC rally and ended its six-day winning streak, supporting the NZDUSD pair. A generally upbeat mood on the equity markets is anticipated to weigh on the safe-haven dollar and assist the risk-averse New Zealand currency. Aside from this, the USD loss may be attributable to repositioning trading before of the highly anticipated US jobs report, which is due to be released later during the early North American session.

However, elevated US Treasury bond yields, which are supported by the Federal Reserve's more hawkish stance, may prevent a deeper USD decline and limit gains for the NZDUSD pair. Recall that Fed Chair Jerome Powell denied expectations of a dovish reversal and stated that it was premature to discuss a halt to the rate-hiking cycle. Powell said that the terminal rate will remain higher than anticipated, resulting in a substantial increase in US Treasury bond yields.

In fact, the yield on the two-year US government bond, which is very sensitive to interest rate hike predictions, reached a 15-year high on Thursday and inched closer to the psychological 5% level. In the interim, the benchmark 10-year US Treasury note remains over the 4% threshold, which is bullish for the USD. Ahead of the big data risk, the fundamental environment could prevent traders from launching aggressive bets and limit the NZDUSD pair's gain for now.