NZD/USD calm around mid-0.72s as Asian traders enter the fray

Although the NZD/USD pair rose towards the 0.73 handle in the first few trading hours of the week amid an improved risk sentiment, it failed to extend its gains in the remainder of the day and turned flat around mid-0.72s. As of writing, the pair was trading at 0.7255.

A strong rebound by the greenback on Monday made it difficult for the pair to preserve its earnings. The DXY, fueled by the sharp upsurge witnessed in the US Treasury yields, jumped to a daily high at 91.96 in the late NA session and was last seen at 91.91, up 0.67% on the day. However, despite the greenback's strength, the pair remained fairly resilient as the fact that the AUD/NZD pair lost nearly 100 pips showed that the kiwi was finding more demand compared to the positively correlated currency aussie. 

Earlier in the day, the New Zealand Institute of Economic Research (NZIER) announced that it revised its 2017/18 growth forecast lower to 2.9% from 3.1%. "Recent indicators have provided more evidence of how New Zealand’s economic growth has throttled back in the last year. It’s by no means a gloomy outlook for the economy – we expect continued moderate growth over the next few years. But that stands in contrast with the Treasury and the Reserve Bank, whose views rest on a substantial acceleration in growth over the next couple of years," Analysts at Westpac argued in a recent report.

The economic calendar won't be offering any data on Tuesday that could impact the price action, and the pair is likely to continue to show technical movements.Moreover, the RSI indicator on the daily graph is moving sideways around the 50 mark, supporting the view of a near-term neutral outlook.

Technical levels to consider:

The pair could face the first hurdle at 0.7325 (50-DMA) ahead of 0.7415 (Aug. 7 high) and 0.7500 (psychological level). On the downside, supports align at 0.7210 (20-DMA), 0.7150 (200-DMA) and 0.7100 (psychological level). 

• NZD/USD needs to clear 0.7340 to look convincing in a bullish sense – Westpac