NZD/USD remains better-bid despite firm greenback, eyes on 0.7090

NZD/USD is currently trading at 0.7055 at the time of writing with a high of 0.7078 and a low of 0.7038 within Mat's bullish trend.

"New Zealand’s solid economic performance is allowing the Government to have its cake and eat it too," explained analysts at Westpac. The Kiwi has rallied this month from 0.6816, recovering from the 10th May low. The bird went on to make fresh daily highs at the end of last week and despite a firm greenback bought up on the back of solid US data at the end of the week.

Market wrap: US GDP boosts yields - Westpac

"The release of an upward revision for Q1 figures, in this case, GDP and better-than-expected figures for the beginning of Q2, in the form of Durable Goods Orders, somehow in line with Fed's idea that soft data at the beginning of the year was transitory," explained Valeria Bednarik, chief analyst at FXStreet. Analysts at Westpac note that the Fed fund futures yields were little changed, pricing a June rate hike as an 85% chance but remain bullish on the Kiwi near term and suggest the next upside target is 0.7090 (21 March high).

NZD/USD 1-3 month:  

However,  Imre Speizer, an analyst at Westpac argues that the Fed’s tightening cycle plus US fiscal expansion should eventually reassert upside pressure on US interest rates and the US dollar, pushing NZD/USD below 0.6800 by year end. "US factors should outweigh local factors which are mostly supportive."

NZD/USD levels

NZD/USD's 20 4hr sma at 0.7035 today has been supporting the ascending channel. 0.7080 is the near-term resistance before 0.7148 on a break of the 0.7100 psychological level. To the downside and below the 20 4hr sma lies 0.7000, 0.6980 and the 50 daily sma at 0.6952 are the key supports.

• AUD/USD: headed back to 0.7330? - BBH
• USD/ZAR recovering majority of bearish-Zumbar-related gap