“¢ Catches some strong bids at the start of a new trading week.
“¢ Resurgent USD demand now seemed to cap any further gains.
“¢ Sliding commodities further collaborate towards keeping a lid.
The NZD/USD pair held on to its modest daily gains through the mid-European session, albeit has retreated around 15-pips from session tops.
After last week’s good two-way price-action, the pair caught some fresh bids at the start of a new week and was supported by a sharp slide in the US Dollar. With the shared currency reversing early euphoric gains, led by optimism over Italian politics, the USD recovered early lost ground and was seen as one of the key factors keeping a lid on any strong up-move for the major.
The negative factor, to some extent, was negated by a subdued action around the US Treasury bond yields, which tends to boost demand for higher-yielding currencies – like the Kiwi. It, however, remains to be seen if the pair is able to maintain its strong bid tone or witnesses some sharp reversal amid holiday-thinned liquidity conditions and a sudden fall in commodity prices.
From a technical perspective, the up-move might still be categorized as corrective in nature and any subsequent up-move seems more likely to get sold into near the key 0.70 psychological mark.
Technical levels to watch
Momentum beyond 0.6970 immediate hurdle is likely to confront some fresh supply near the 0.70 handle, above which a bout of short-covering could lift the pair further towards 0.7045-50 hurdle. On the flip side, 0.6930 level now seems to act as an immediate support and is followed by the 0.6900 handle, which if broken might turn the pair vulnerable to resume with its prior depreciating fall.
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