NZD/USD consolidates daily gains below 0.70

The kiwi remains as one of the strongest currencies against the greenback on Monday, with the NZD/USD pair refreshing its monthly high just a couple of pips below the 0.70 handle, at 0.6998. Unable to sustain its bullish momentum amid a lack of fresh fundamental catalysts in the NA session, the pair has been moving in a tight channel in the last couple of hours. As of writing, the pair was at 0.6994, up nearly 1% on the day.

The commodity-linked kiwi's solid performance on Monday seems to be fueled by the rising crude oil prices on recent reports suggesting that an OPEC-led supply cut may be extended for another nine months. In addition to a stronger NZD, the greenback continues to stay under a constant selling pressure amid unresolved political issue in the U.S. On Monday, the US Dollar Index fell further to a new 6-month low at 96.70 and has been consolidating its losses in a horizontal band below the 97 handle. At the moment, the index is at 96.90, down 0.1% on the day.

• Iraqi OilMin: Agreed with Saudi Arabia on extending OPEC oil output cuts for further 9 months

The next data from New Zealand will be the trade balance figures scheduled to be released in the early Asian session on Wednesday. A contraction in the trade surplus could allow the RBNZ Governor Wheeler to preserve the accommodative policy stance before his term ends in September, making it difficult for the NZD to build on its recent gains.

Technical outlook

With a decisive break above 0.70 (psychological level), the pair could target 0.7040 (100-DMA) and 0.7080 (200-DMA). To the downside, supports align at 0.6950 (50-DMA), 0.6900 (psychological level/10-DMA) and 0.6840 (May 4 low).

• NZD/USD: Positive bias for the week, targeting the 0.71 area - Westpac