NZD/USD stays calm near 0.68 ahead of US data

• Renewed trade optimism helps kiwi find demand on Monday.
• US Dollar Index stays in green above 96.50.
• Coming up: ISM-NY Business Conditions Index and construction spending from the U.S.

The NZD/USD pair started the week on a high note boosted by optimism surrounding the U.S. – China trade talks. After advancing to 0.6830 area in the Asian trading hours, however, the pair struggled to push higher and erased its daily gains. As of writing, the pair was virtually unchanged on a daily basis at 0.6800.

The Wall Street Journal over the weekend reported that it was likely for the U.S. and China to reach a formal trade deal toward the end of the month when President Trump and his Chinese counterpart Xi meet. Furthermore, the upbeat sentiment surrounding major Asian equity indices on Monday provided additional support to the risk-sensitive currencies such as the kiwi.

On the other hand, following an uninspiring  start to the day, the greenback took advantage of the broad-based selling pressure surrounding its major European rivals and the US Dollar Index gained traction to force the NZD/USD pair to retrace its early upsurge. Ahead of the ISM-NY’s Business Conditions Index and construction spending data from the U.S., the DXY is at its highest level in nearly 10 days at 96.60, adding 0.17% on the day.

On Tuesday, the RBA is scheduled to announce its rate decision and release its policy statement. A sharp reaction in the AUD/USD pair could impact the strongly-correlated NZD/USD pair’s price action during the Asian session.

Technical levels to consider

The pair could face the initial resistance at 0.6815 (50-DMA) ahead of 0.6855 (Feb. 28 high) and 0.6900 (psychological level/Feb. 27 high). On the downside, supports are located at 0.6800 (daily low), 0.6760 (Feb. 22 low) and 0.6725 (Feb. 11 low).