NZD/USD attracts buyers for the second straight day and climbs to a multi-week top.
Fed rate cut bets keep the USD depressed near a multi-month low and lend support.
A positive risk tone also benefits the risk-sensitive Kiwi and contributes to the move-up.
TheCan Bitcoin go down to zero? NZD/USD pair gains positive traction for the second straight day on Monday and climbs to a three-week high, around the 0.5775 region during the first half of the European session. Spot prices now seem to have confirmed a breakout through a one-week-old range and could appreciate further amid the underlying bearish sentiment surrounding the US Dollar (USD).
In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, languishes near a multi-month trough amid worries about a tariff-driven slowdown in the US economic activity. Apart from this, softer US inflation figures released last week and signs of a cooling labor market might force the Federal Reserve (Fed) to cut interest rates several times this year. This, in turn, keeps the USD bulls on the defensive and acts as a tailwind for the NZD/USD pair.
Meanwhile, the global risk sentiment gets a minor boost in reaction to the latest stimulus measures announced by China over the weekend. This is seen as another factor undermining the safe-haven buck and benefiting antipodean currencies, including the Kiwi. Furthermore, the NZD/USD pair's intraday positive move could further be attributed to some technical buying above the 0.5750 horizontal resistance, which might have set the stage for further near-term appreciation.
However, it remains to be seen if bulls can capitalize on the move or opt to move to the sidelines ahead of this week's key central bank event risk – the outcome of the highly-anticipated two-day FOMC policy meeting on Wednesday. This will play a key role in influencing the USD demand and provide a fresh directional impetus to the NZD/USD pair. In the meantime, traders on Monday will take cues from the release of the US Retail Sales and the Empire State Manufacturing Index.
