The New Zealand dollar exceeds expectations ahead of U.S. employment data.

What a day for the kiwi! As I watch the NZD/USD rise to nearly 0.5870 during today's European trading hours, I can't help but think that the New Zealand dollar is teaching a lesson to its competitors amid this risk appetite environment.

And the kiwi has strengthened by 0.45% - not bad for a currency that many tend to ignore! Of course, we are all waiting for the non-farm payroll data (NFP) from the United States which will be released at 12:30 GMT. Personally, I believe this data will be crucial in determining whether the Federal Reserve will finally give us that rate cut that we have been waiting for this month.

The kiwi dominates today

If we look at the performance table, the New Zealand dollar has been the strongest against the USD. It's no coincidence - S&P 500 futures are also rising during the European session, indicating that investors are willing to take on more risk today.

Meanwhile, the US dollar is facing selling pressure ahead of the employment data. The August report is expected to show that only 75,000 new jobs were created, nearly in line with the previous reading of 73,000. The unemployment rate is likely to rise to 4.3% from the previous 4.2%.

According to the CME FedWatch tool, the Fed is very likely to cut interest rates at this month's monetary policy meeting. It's about time!

Technical Analysis: Where is the NZD/USD headed?

The pair continues to face resistance near the 20-day exponential moving average, which is around 0.5887. Looking at the 14-day relative strength index (RSI), I see that it is dropping towards 40.00. If it breaks below that level, we could see a new bearish momentum.

If the pair falls below the minimum of August 2nd of 0.5800, it could drop to the minimum of April 11th of 0.5730, and then to the round support level of 0.5700.

In the opposite scenario, if it manages to return above the psychological level of 0.6000, the kiwi pair could rise towards the high of June 19 at 0.6040 and the low of September 11 at 0.6100.

The truth is that I would bet on this last scenario. The market seems ready for a significant change in U.S. monetary policy, and higher-risk currencies like the kiwi could be the big winners.

This employment data will be decisive. As we know, the monthly employment report from the United States is considered the most important economic indicator for forex traders. It is closely related to the overall performance of the economy and is monitored by policymakers.

For those of us trading in this market, this data can set the course of our positions for the coming weeks. Let's keep a close eye on today's publication.