NZD/USD fluctuates in tight range near 0.6100

• NZD/USD consolidates last week’s gains near 0.6100 on Monday.
• US Dollar Index stays flat on the day below 100.
• Trading action is likely to remain subdued in the remainder of the day.

The NZD/USD capitalized on the upbeat market mood last week and gained more than 150 pips. In the absence of significant fundamental drivers at the start of the new week, the pair is having a difficult time finding direction and moving sideways near 0.6100.

Financial markets in the US will be closed in observance of Memorial Day and the pair could extend its sideways grind. Meanwhile, the US Dollar Index, which lost 0.55% last week, is staying quiet below 100.

Eyes on Tuesday’s macroeconomic data releases

During the Asian session on Tuesday, Trade Balance data from New Zealand will be looked upon for fresh impetus. The US economic calendar will feature New Home Sales, Conference Board (CB) Consumer Confidence Index and Dallas Fed Manufacturing Index data. 

Commenting on NZD/USD’s near-term outlook, “extraordinary levels of liquidity are the proximate driver, and conceptually, there are arguably as many reasons to be bullish (we’ve beaten COVID-19, commodity prices are holding up, risk appetite has rebounded quickly) as there are to be bearish,” said ANZ analysts. “Tourism was a big piece of the economy and it’s now gone, our yields are lower than the US and Australia’s, negative rates may be coming, risk sentiment could sour at any time.”

Technical levels to watch for