- NZD/USD gains strong traction for the fourth straight day and climbs to over a one-month high.
- The technical setup favours bullish traders bulls and supports prospects for additional gains.
- Any meaningful dip towards the descending trend-line breakout is likely to get bought into.
The NZD/USD pair prolongs its recent upward trajectory witnessed over the past two weeks or so and continues scaling higher for the fifth successive day on Monday. This also marks the seventh day of a positive move in the previous eight and lifts spot prices to over a one-month high, around the 0.6350 region heading into the North American session.
The US Dollar (USD) languishes near the monthly low touched last week amid firming expectations that the Federal Reserve (Fed) is nearing the end of its year-long rate-hiking cycles. This, along with concerns about the US debt ceiling and the risk-on impulse, further undermines the safe-haven Greenback and provides an additional lift to the risk-sensitive Kiwi.
From a technical perspective, the momentum allows the NZD/USD pair to break through a short-term descending trend-line hurdle extending from the YTD peak touched in February. Given that oscillators on the daily chart holding comfortably in the bullish territory and are still far from being in the overbought zone, the set-up supports prospects for additional gains.
Hence, a subsequent move towards retesting the April monthly swing low, around the 0.6380 region, en route to the 0.6400 mark, looks like a distinct possibility. Some follow-through buying has the potential to lift the NZD/USD pair towards the next relevant hurdle near the 0.6435-0.6440 region, above which bulls might aim to reclaim the 0.6500 psychological mark.
On the flip side, the descending trend-line resistance breakpoint, currently pegged just below the 0.6300 round-figure mark, now seems to protect the immediate downside. Any further decline is more likely to attract fresh buyers and remains limited near the 200-day Simple Moving Average (SMA), around the 0.6255 zone, which should act as a strong base for the NZD/USD pair.
NZD/USD daily chart
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Key levels to watch
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