- US Dollar Index struggles to preserve daily gains.
- Chinese Manufacturing PMI came in above 50 in May.
- Coming up: Markit and ISM Manufacturing PMI data from the U.S.
After posting a small 20-pip loss last week, the NZD/USD pair gained traction on Monday and advanced to its highest level since mid-May at 0.6571. As of writing, the pair was up 0.55% on a daily basis at 0.6569.
Earlier today, the Caixin Manufacturing PMI data in China came in at 50.2 in May to show modest expansion in the sector’s business activity and helped the antipodeans find demand. However, the fact that none of the latest headlines surrounding the U.S.-China trade conflict hint at a possible compromise from neither side suggests that the pair’s price action is possibly the beginning of an overdue technical correction. Nevertheless, further escalation of trade tensions could make it difficult for the pair to stretch higher in the near term.
On the other hand, after falling sharply and erasing all of its weekly gains on Friday, the US Dollar Index staged a modest rebound but struggled to gather momentum ahead of the IHS Markit’s and the ISM’s Manufacturing PMI reports, helping the pair cling to its daily gains. At the moment, the DXY is posting small daily losses at 97.58.
In the early Asian session, the Statistics New Zealand will be releasing its Terms of Trade Index, which is a measure of the balance between imports and exports.
Technical levels to watch for
The pair could face the initial resistance at 0.6580 (May 16 high) ahead of 0.6620 (50-DMA) and 0.6650 (May 3 high). On the downside, supports are located at 0.6530 (daily low), 0.6500 (psychological level) and 0.6480 (May 23 low).
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