NZD/USD erases daily gains, sits comfortably above 0.70
|After reaching its fresh two-month high at 0.7090 before the NA session went underway, the NZD/USD pair started to retrace its earnings as traders cashed in their profits. As of writing, the pair was trading at 0.7050, down 0.12% on the day.
The pair's upsurge struggled to become sustainable as the move was not supported by a data. Furthermore, the fact that the trading volume diminished in the NA session due to the Memorial Day holiday may have made it difficult for the traders to hold on to their positions ahead of tomorrow's important macro data.
On Tuesday, the Federal Reserve's favorite inflation gauge, the core Personal Consumption Expenditures (PCE) index, will be released. The data came in at 1.6% in March on a yearly basis and if April's reading reveals that it approaches Fed's 2% target rate, the odds of a June rate hike could increase, allowing the greenback gather strength against its rivals and weighing on the NZD/USD pair. At the moment, the US Dollar Index reflects the low trading volume as it stays flat at last week's closing level at 97.33.
Technical levels to consider
A daily close above 0.7060/70 area (Fib. 61.8% retracement of Jan - Feb rise/200-DMA) could open the door towards 0.7100 (psychological level) and 0.7145 (Mar. 2 high). To the downside, supports could be seen at 0.7025 (100-DMA), 0.6950 (50-DMA) and 0.6900 (psychological level).
- NZD: Patience required to embrace bullish view for the near-term - TDS
- NZ Budget: Fiscal outperformance allows a looser stance – HSBC
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