“¢ RBNZ’s optimistic outlook continues to underpin domestic currency – NZD.
“¢ US-China trade optimism/renewed USD selling bias remained supportive.
The NZD/USD pair surrendered a major part of the early gains to 1-1/2 week tops, albeit has managed to hold its neck above mid-0.6800s.
The pair built on last week’s post-RBNZ strong rebound from the 0.6700 neighbourhood, or three-week lows, with a combination of supportive factors fueling the ongoing positive momentum for the fifth consecutive session.
Growing optimism over a possible resolution to the US-China trade talks, especially after both sides reported progress in last week’s trade talks, continued lending some support to perceived riskier currencies – like the Kiwi.
This coupled with a follow-through US Dollar retracement from 2019, triggered by the US President Donald Trump’s declaration of a national emergency on border security on Friday, remained supportive of the ongoing up-move.
The up-move, however, failed just ahead of the 0.6900 handle as investors now seemed reluctant to place any aggressive bets amid absent relevant market moving economic releases and the President’s Day holiday in the US.
Moving ahead, this week’s important release of the latest FOMC meeting minutes will be looked upon for clues over the central bank’s rate hike path for 2019 and eventually provide a fresh directional impetus for the major.
Technical levels to watch
On a sustained move beyond the mentioned handle, the pair is likely to aim towards challenging YTD tops, around the 0.6940 region. On the flip side, any further retracement is likely to find some support near the 0.6830-25 region ahead of the 0.6800 round figure mark.
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