The New Zealand Dollar is edging higher against the U.S. Dollar early Friday as traders prepare for the U.S. labor market report that could provide clues to timing of the of the Federal Reserve’s next move.

All eyes are on Friday’s jobs report, which will be key as the Federal Reserve prepares to slow its $120 billion-per-month bond-buying program. Economists are expecting the economy to have added 500,000 jobs in September, according to estimates from Dow Jones. In August, just 235,000 jobs were added, significantly below the consensus estimate of 720,000.

At 02:41 GMT, the NZD/USD is trading .6943, up 0.0013 or +0.19%.

The Federal Reserve has said it is likely to begin reducing its monthly bond purchases as soon as November and then follow up with interest rate increases, as the U.S. central bank’s turn from pandemic crisis polices gains momentum.

The NZD/USD could weaken if U.S. Non-Farm Payrolls report beats the 500,000 jobs estimate. We’re saying “could” because it’s hard to tell if a strong number has been priced in. Furthermore, the move will be dictated by the movement in Treasury yields. They have been rising this week which could mean traders are already pricing in a strong number.

Daily NZD/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through .6860 will signal a resumption of the downtrend. A move through .7157 will change the main trend to up.

The minor trend is also down. A trade through .6982 will change the minor trend to up. This will shift momentum to the upside.

The NZD/USD is currently trading on the strong side of a Fibonacci level at .6924, making it support.

On the upside, the nearest resistance is a 50% level at .6988. This is a potential trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

The direction of the NZD/USD on Friday will be determined by trader reaction to .6924.

Bullish Scenario

A sustained move over .6924 will indicate the presence of buyers. If this move creates enough upside momentum then look for the rally to possibly extend into .6982 to .6988.

The 50% level at .6988 is a potential trigger point for an acceleration into .7027.

Bearish Scenario

A sustained move under .6924 will signal the presence of sellers. This could trigger a quick break into a pivot at .6921. If this fails as support, we could see a stronger sell-off with .6860 the next likely target.