NZD/USD bull trend intact ahead of Australian GDP

• NZD was boosted by a strong rally in copper and gold as well as the positive sentiment on AUD and Wall Street.
• The greenback is showing signs of exhaustion in what could be a crowded trade.  
• The Australian  Gross Domestic Product can impact NZD at 1:30 GMT on Wednesday.

The Kiwi reached an intraday high at 0.7045 in early European trading then dropped all the way to 0.6997 to rebound almost 40 pips in the first part of the American session. It was last seen trading at 0.7023, losing 0.07% on Tuesday.

NZD/USD is benefitting from a weaker USD and a relatively bullish sentiment on Antipodean currencies.  

In fact, the US Dollar Index (DXY) which tracks the greenback relative to a basket of six other currencies, had a modest move higher to 94.32 on Tuesday but soon erased its gains and dropped back below the 94.00 mark. This is the fourth day in a row where DXY is directionless. The better-than-expected US ISM Non-Manufacturing PMI for May didn’t help to support the buck which is trading near a key resistance zone after almost a two-month bullish run. Many analysts are talking about an exhaustion of the bull move in what could be a crowded trade.  

The New-Zealand Dollar is underpinned by the bullish sentiment on positively-correlated AUD  as well as a strong boost in copper and gold prices. To a certain extent, the risk-on sentiment on Wall Street is also helping AUD and NZD which are positively correlated to US indices.

Looking ahead, the Australian Gross Domestic Product for the first quarter of the year is scheduled at 1:30 GMT on Wednesday and might impact the NZD as well. GDP is an important macroeconomic indicator so any deviation can lead to lots of volatility in the currency markets.

Meanwhile, earlier in the day in New Zealand, the GDT  (Global Dairy Trade) Price Index decelerated to -1.3% from 1.9% without affecting NZD too much.

NZD/USD 4-hour chart  

NZD/USD found support near the 0.7000 handle. It is currently trading above its 50, 100 and 200-period simple moving average on the 4-hour chart suggesting bullish momentum. A strong bullish break above 0.7049 weekly  high resistance would likely open the gates to a continuation move toward  the 0.7100 handle and the 0.7150 March 21 swing low. On the flip side, a break below the 0.7000 handle support could see a drop back to the 0.6960 swing low.