NZD/USD retakes 0.74 handle
- Broad-based USD weakness pushes Kiwi above 0.74.
- Fears of trade war may hurt risk assets.
Kiwi found bids at 0.7376 in early Asia and rose to a session high of 0.7407, boosting the odds of a move higher to 0.7500 levels this week.
Analysts at Westpac believe, "the persistent theme driving NZD/USD during the past few months has been a declining US dollar. Until that USD trend is arrested, NZD/USD will remain bid.". That said, the increased risk of a full-blown trade war between the US and China could weigh over NZD and other risk assets.
However, as of now, the American dollar is on the retreat across the board even though the Fed fund futures are signaling four rate hikes by end-2019.
Looking ahead, the Kiwi may take cues from the FOMC minutes (due this Wednesday), while continuing to ignore the traditional bond market and exchange rate correlations.
NZD/USD Technical Levels
A move above 0.7420 (Jan. 31 high) would open up upside towards 0.7437 (Friday's high) and 0.7459 (Jul. 21 high). On the downside, a breakdown of support at 0.7376 (session low) could yield a pullback to 0.7349 (1h 100-MA) and 0.73 (1h 200-MA).