NZD/USD on track to record highest daily close in more than 5 months above 0.69

U.S. - China trade truce boosts the demand for NZD.
US Dollar Index looks to close the day modestly lower near 97.

Eren Sengezer FXStreet

The NZD/USD pair started the week with a 50-pip bullish gap as the kiwi gathered strength after reports of the U.S. and China agreeing to a ceasefire on trade war following the meeting between US President Trump and Chinese President Xi at the G20 summit in Argentina.

Additionally, the broad-based selling pressure witnessed on the greenback during the first half of the day provided an additional boost to the pair and helped it reach its highest level since June at 0.6940. Although the pair retraced a small portion of its gains during the NA session, it still looks to record its highest daily close since late June. As of writing, the pair was up 0.8% on the day at 0.6920.

The US Dollar Index, which fell to a daily low of 96.70 earlier in the day, recovered above the 97 mark but failed to extend its correctional rise as the mixed PMI data kept investors away from the currency.

US: Markit Manufacturing PMI falls to 55.3 vs 55.4 expected.
US: ISM Manufacturing PMI rises to 59.3 vs 57.5 expected.

There won't be any macroeconomic data releases from New Zealand in the Asian session on Tuesday but markets will be paying a close attention to the RBA's rate decision and the monetary policy statement. A sharp reaction in the AUD/USD pair could impact the strongly-correlated NZD/USD pair's price action.

Technical levels to consider

The initial resistance for the pair aligns at 0.6940 (daily high) ahead of 0.7000 (psychological level) and 0.7060 (Jun. 6 high). On the downside, supports are located at 0.6890 (daily low), 0.6840 (Nov. 29 low) and 0.6780 (200-DMA).

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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