NZD/USD erases opening gap, posts small daily gains below 0.7200

• NZD/USD started the new week with a bearish gap.
• US Dollar Index consolidates last week’s gains below 92.00.
• Focus shifts to mid-tier US data, FOMC Chairman Powell’s speech.

The NZD/USD pair started the week with a bearish gap but staged a modest rebound in the early trading hours of the European session. As of writing, the pair was posting small daily gains at 0.7168.

Focus shifts to FOMC Chairman Powell’s speech

The risk-averse market environment, as reflected by the poor performance of major Asian equity indexes, helped the greenback gather strength against its major rivals in the Asian session.

The US Dollar Index (DXY), which closed the previous week in the positive territory, rose to a daily high of 92.15 but lost its traction ahead of FOMC Chairman Jerome Powell’s speech at 1300 GMT. A more-than-2% decline in the 10-year US Treasury bond yield seems to be making it difficult for the USD to preserve its strength.

At the moment, the DXY is virtually unchanged on the day at 91.90. Chicago Fed National Activity Index and Existing Home Sales data will be featured in the US economic docket as well.  

Meanwhile, the S&P 500 Futures are flat on the day, suggesting that investors could remain cautious in the second half of the day and allow the USD to stay resilient against its rivals.

On Tuesday, Westpac Consumer Servey for the first quarter and February Credit Card Spending from New Zealand will be looked upon for fresh impetus.

Technical levels to watch for