NZD/USD surges through 50-DMA hurdle to fresh monthly tops

The NZD/USD pair continued gaining traction through early NA session and surged through the 50-day SMA hurdle near 0.6960 region to hit fresh month tops.

Currently trading around 0.6975-80 level, the pair built on Friday's up-move and latest leg of up-move could be attributed to persistent greenback selling interest, with the key US Dollar Index dropping below the 97.00 handle to hit fresh six month lows. Meanwhile, possibilities of some stops being triggered on a decisive move beyond mid-0.6900s also seems have also collaborating towards the pair's strong up-move in the past hour or so.

It, however, remains to be seen if the up-move is backed by genuine buying or turns out to a stop run amid a modest up-tick in the US treasury bond yields, which tends to weigh on higher-yielding currencies - like the Kiwi. With markets already pricing-in June Fed rate-hike action, a follow through buying interest and a move past the key 0.70 psychological mark now seems a distinct possibility.

With an empty US economic docket, investors on Monday will remain focused on speeches from various FOMC members in order to gain fresh insight over the central bank's near-term monetary policy outlook and eventually determine the pair's near-term direction ahead of the release of Fed meeting minutes on Wednesday and NZ annual budget on Thursday. 

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Technical levels to watch

From current levels, the key 0.70 psychological mark is likely to act as immediate hurdle, above which the momentum is likely to get extended towards 0.7040 resistance area. On the flip side, retracement back below 0.6960 level (50-day SMA) now seems to find support near 0.6940 level, which if broken could accelerate the slide back towards the 0.6900 handle.