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  • A modest USD pullback helped the pair to regain traction on Monday.
  • Fading US-China trade optimism kept a lid on any strong follow-through.

The NZD/USD pair maintained its bid tone through the mid-European session on Monday, albeit struggled to extend the positive momentum further beyond mid-0.6600s.

The pair stalled last week’s retracement slide from 2-1/2 month tops and managed to regain some positive traction amid a modest US Dollar pullback from over two-week tops, touched in the aftermath of Friday’s upbeat headline US NFP print.

The US President Donald Trump’s fresh criticism about the Fed’s policy tightening exerted some downward pressure on the greenback and eventually turned out to be one of the key factors behind the pair’s uptick on the first trading day of a new week.

However, fading optimism over a quick resolution to the prolonged US-China trade disputes kept a lid on any runaway rally amid a slight deterioration in the global risk sentiment, which tends to undermine demand for perceived riskier currencies – like the Kiwi.

In absence of any major market-moving economic releases from the US, the USD price dynamics might continue to act as a key determinant of the pair’s momentum ahead of the Fed Chair Jerome Powell’s public appearance on Tuesday and a two-day Congressional testimony on Wednesday and Thursday.

This along with the release of the latest consumer inflation figures from the US, due on Thursday, will play an important role in influencing Fed rate cut expectations and help investors determine the pair’s next leg of a directional move.  

Technical levels to watch