The NZD/USD pair built on previous session’s strong up-surge through 50-day SMA hurdle and touched fresh monthly tops near 0.7040 level.
The pair continued gaining traction for the third consecutive session and extended its recovery move from 10-month lows touched on May 11. Investors continued to dump the greenback, with the key US Dollar Index plunging to the lowest level since the US Presidential election, amid escalating political uncertainty in the US and has been the key force driving the pair higher over the past couple of week.
Persistent US Dollar selling interest clearly suggests that markets now seemed concerned over Trump’s ability to push through his economic agenda and ambitious tax cut and infrastructure spending plans.
Adding to this, the ongoing slide in the US treasury bond yields extended little support to the buck and benefitted higher-yielding currencies – like the Kiwi, further collaborating to the pair’s recent strong up-move to the highest level since April 24.
Trader now look forward to the US economic docket, featuring the release of flash PMI prints, New Home Sales data and the Richmond Manufacturing Index from the US, while several FOMC members are also scheduled to speak on Tuesday.
Technical levels to watch
From current levels, 100-day SMA near 0.7050-55 are is likely to act as immediate strong resistance, above which the pair is likely to accelerate the up-move towards 0.7090 level (March 21 high) ahead of the very important 200-day SMA hurdle near 0.7115 region. On the downside, the key 0.70 psychological mark now seems to act as immediate support, which if broken might trigger a corrective slide towards 0.6950-45 horizontal support en-route the 0.6900 handle.