NZD/USD trades at two-week highs above 0.6750 ahead of ISM data
- US Dollar Index extends decline for the fourth straight day.
- 10-year T-bond yield drops nearly 1% on Monday.
- Attention turns to ISM non-manufacturing PMI report.
After adding more than 150 pips in the second half of the previous week, the NZD/USD pair preserved its bullish momentum on Monday and rose to its highest level since December 21 at 0.6766. As of writing, the pair was trading a couple of pips below that level, adding 0.5% on a daily basis.
The broad-based selling pressure surrounding the US dollar seems to be providing the primary boost to the pair today. Following a positive reaction to the upbeat NFP data on Friday, the US Dollar Index reversed its course as Fed chief Powell adopted a cautious tone regarding the policy outlook while speaking at a conference in Atlanta. Additionally, another sharp fall witnessed in the 10-year T-bond yield made it difficult for the greenback to reverse its losses against its rivals.
Later in the session, the ISM is scheduled to release its non-manufacturing PMI. Last week, the ISM manufacturing PMI came in at 54.1 in December and missed the market expectation of 57.5 by a wide margin to cause concerns over a possible economic slowdown in the U.S. in 2019. A soft reading in today's data is likely to ramp up the bearish pressure on the buck.
Technical levels to consider
The initial resistance for the pair aligns at 0.6790 (Dec. 21, 2018, high) ahead of 0.6870 (Dec. 19, 2018, high) and 0.6900 (psychological level). On the downside, supports could be seen at 0.6730 (daily low), 0.6670 (Jan. 4 low) and 0.6615 (Jan. 3 low).