• RBNZ sounded optimistic about the domestic economic outlook and prompts aggressive short-covering.
• Modest USD pull-back/US-China trade optimism/risk-on mood remained supportive of the upsurge.
The NZD/USD pair held on to its post-RBNZ strong gains and is currently placed at the top end of its daily trading range, just below mid-0.6800s.
The pair continued showing some resilience near 100-day SMA support and witnessed some aggressive short-covering move after the Reserve Bank of New Zealand (RBNZ) sounded optimistic on the outlook for the domestic economy, bucking the recent dovish shift by other major central banks.
The tone of the accompanying February monetary policy statement was not as dovish as markets were expecting, while the RBNZ Governor Adrian Orr said that we expect to keep the OCR at this level through 2019-2020 and the direction of our next move could be up or down.
This coupled with some renewed optimism over a possible resolution to the US-China trade disputes and a follow-through US Dollar retracement, amid the prevalent risk-on mood across global financial markets further collaborated to the pair's sharp intraday upsurge of over 125-pips.
It would now be interesting to see if bulls are able to maintain their dominant position near one-week tops or opt to take some profits off the table as the focus now shifts to the release of the latest US consumer inflation figures, due later during the early North-American session.
Technical levels to watch
Any subsequent up-move is likely to confront immediate resistance near the 0.6880 level and is closely followed by the 0.6900 round figure mark. On the flip side, the 0.6810-0.6800 region now becomes immediate support to defend, which if broken might accelerate the retracement slide further towards 0.6765-60 support area.
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