NZD/USD tests multi-month highs above 0.73

• NZD/USD extends gains above 0.73.
• DXY continues to push lower toward the 90 mark.

Ater starting the day below the 0.73 mark, the NZD/USD pair moved in a confined range before gathering momentum during the European session. Following a decisive break above the 0.73 handle, the pair advanced to a fresh four-month high 0.7330 and was last seen trading at 0.7326, where it was up 0.75% on the day.

The pair's latest upsurge seems to be a product of the increased selling pressure on the greenback. With latest headlines suggesting that it's still unclear if the U.S. Senate will reach the 60 votes needed to reopen the government on Monday, investors remain reluctant to take any long USD positions. The US Dollar Index, which recently fell to a new daily low at 90.16, is now down 0.3% at 90.22.

On the other hand, major equity indexes in the U.S. try to stay in the positive territory during the first half of the session, allowing the risk-sensitive kiwi to hold on to its gains against the buck. At the moment, the Dow Jones Industrial Average is recording modest gains while the S&P 500 is up 0.3%.

The macroeconomic calendar won't be featuring any data that could potentially impact the trading action from New Zealand and the United States on Tuesday and the political developments from the U.S. are likely to continue to drive the price action. 

Technical outlook

With a daily close above 0.7330 (Jan. 17 high/daily high), the pair could aim for 0.7415 (Sep. 20 high) and 0.7500 (psychological level). On the downside, supports are located at 0.7265 (daily low), 0.7150 (200-DMA) and 0.7070 (Jan. 4 low).