NZD/USD trades at 13-month highs above 0.6770
- NZD/USD gained traction after closing flat on Monday.
- Greenback remains under heavy selling pressure on Tuesday.
- Manufacturing PMI data will be featured in the US economic docket.
The NZD/USD pair failed to hold on to its daily gains on Monday and closed flat near 0.6730. With the broad-based USD weakness remaining the main market theme on Tuesday, the pair gained traction and touched its highest level since July of 2019 at 0.6777. As of writing, NZD/USD was up 0.55% on the day at 0.6770.
The risk-on market environment and the Federal Reserve's new policy strategy to target average inflation continue to weigh on the USD. After losing nearly 1% last week, the US Dollar Index (DXY) extended its slide and slumped to its worst level in more than two years at 91.75.
Ahead of the IHS Markit's and the ISM's Manufacturing PMI data, the DXY is down 0.32% on the day at 91.87.
NZD/USD near-term outlook
Credit Suisse analysts think that NZD/USD could continue to push higher if it breaks above the 0.6756/91, where a cluster of major resistances is located.
“Above 0.6791 the kiwi would see the completion of a significant medium-term base to mark a more sustained turn higher with resistance then seen next at 0.6828/37, then the 0.6939/70 highs of late 2018 and early 2019," analysts said. "Near-term support moves to 0.6748, with 0.6729/19 ideally holding to keep the immediate risk higher. A break can see a small top to warn of a retreat back to 0.6680/75 initially.”
Additional technical levels to watch for