NZD/USD pulls away from daily highs, holds above 0.69

The NZD/USD pair rose to 0.6944 at the end of the Asian session and started to retrace its gains and slipped to a session low of 0.6910 at the early trading hours of the NA session. As of writing, the pair was at 0.6917, losing 0.16% on the day.

The primary driver of the pair's drive action seems to be the greenback movements. The US Dollar Index started the day with a bullish gap and continues to correct last week's heavy losses. As the French election saga came to an end with the pro-EU candidate Macron becoming the new president of France, the Fed is bound to be the center of attention again. Although Friday's positive employment data couldn't help the greenback on Friday, the market expectation of a June hike strengthened. In fact, the CME Group FedWatch Tool shows the probability of a June hike at 87.7% on Monday.

On the other hand, the weak performance of commodities continues to dent the demand for the kiwi with the iron ore prices losing more than 2% on Monday. There are no data scheduled from New Zealand in the Asian session and the DXY could help the pair find direction in the remainder of the day. At the moment, the index is inching closer to 99, gaining 0.52% at 98.94. Looking at the weekly economic calendar, we see that the next important event for the kiwi will take place on Wednesday night as the RBNZ will decide on its monetary policy.

• RBNZ to keep the OCR on hold at 1.75% - Westpac

Technical outlook

0.6900 (psychological level) can be seen as the initial support ahead of 0.6840 (10-month low/May 4 low) and 0.6800 (psychological level). To the upside, resistances could be encountered at 0.6975 (50-DMA), 0.7000 (psychological level) and 0.7075 (100-DMA).

• NZD/USD: Neutral bias, well supported at 0.6850 - Westpac