NZD/USD clings to gains above 0.5900 on improved market sentiment

• RBNZ’s Orr says monetary support will be kept for as long as necessary.
• US Dollar Index stays flat on the day above 100.50.
• Major European equity indexes post decisive gains at the start of the week.

The NZD/USD pair erased more than 100 pips last week but staged a recovery on Monday. As of writing, the pair was trading at 0.5925, adding 0.93% on a daily basis.

Risk sentiment turns positive at the start of the week

Earlier in the day, Reserve Bank of New Zealand (RBNZ) Governor Orr reiterated that the RBNZ will keep the monetary support going for as long as necessary through QE and other tools. “Many firms will make it through this period through working with their bankers and their own team, and understanding and utilising the government’s significant and expanding support packages,” Orr added.

Meanwhile, the upbeat performance of global equity indexes provided a boost to the risk-sensitive NZD as well. At the moment, major European stock indexes are up between 2% and 4.3%.

On the other hand, the US Dollar Index, which added 2.4% last week, is staying relatively quiet near the 100.70 handle on Monday to allow the risk perception to continue to drive the pair’s movement.

There won’t be any macroeconomic data releases from the US in the remainder of the day. During the early trading hours of the Asian session on Tuesday, the NZIER’s Business Confidence for the first quarter will be looked upon for fresh impetus.

Technical levels to watch for