NZD/USD advances to highest level since early March, 0.71 in sight
Although the NZD/USD pair reached its highest level since early March at 0.7087 during the first half of the trading day on Monday, it erased all of its gains as investors cashed in their profits in the quiet NA session. However, the pair gathered momentum once again on Tuesday and inched closer to 0.71 handle. As of writing, the pair is trading at 0.7094, gaining 0.5% on the day.
The NZD seems to be one of the best-performing currencies against the greenback on Tuesday. The move appears to be driven by the USD sell-off as there are no clear catalysts that could increase the demand for the NZD. As of writing, the US Dollar Index is at 97.28, losing 0.05% on the day. In fact, due to the falling oil prices, commodities remain under pressure, hurting the overall market sentiment.
- US: consumer confidence starting to ebb - ING
- CME Group FedWatch June hike probably virtually unchanged post-US data
Despite these factors, which, generally speaking, dents the demand for a commodity-linked currency like the NZD, the pair is gaining nearly 50 pips on Tuesday. However, the pair could have a difficult time building on its gains ahead of the Reserve Bank of New Zealand's Financial Stability Report, which will be released early in the Asian session. The report will reveal the bank's assessment of interest rates, inflation, and overall economic conditions.
Technical outlook
After piercing through 0.7060, Fibo 61.8% retracement of Jan - Feb rise, the pair could find resistance at the 50% retracement of the same move at 0.7120 ahead of 0.7045 (Mar. 2 high). To the downside, supports are located at 0.7025 (100-DMA), 0.6950 (50-DMA) and 0.6900 (psychological level).
- NZD/USD clings to the bullish bias – UOB