NZD/USD: Recovery remains capped near 0.6975

• Bulls lack momentum as USD rally regains poise.
• 0.6903 still on sight ahead of the US prelim UoM consumer sentiment.

The NZD/USD pair failed once again to take on its recovery from 2018 lows (0.6903) beyond the 0.6975 resistance area and slipped back towards 0.6960 region heading into the European opening bells.

The USD bulls are seen fighting back control after yesterday’s brief corrective slide fuelled by disappointing US CPI figures, now pushing the USD index back towards the 93 handle, up +0.15% on the day.

Despite subdued oil prices and firmer US dollar, the Kiwi manages to find some support from strengthening New Zealand’s manufacturing sector activity, as reflected by the Business NZ Manufacturing Index that arrived at 58.9 versus 53.1 previous.

However, the major risks further downside below a break of the 0.6900 levels on the back of monetary policy divergence between the Fed and RBNZ, especially after the RBNZ turned dovish at its monetary policy meeting on Thursday.

Focus now shifts towards the US prelim UoM consumer sentiment data for fresh impetus on the pair while the US-China trade talks will be also closely eyed.

NZD/USD Technical Levels

Omkar Godbole, Analyst at FXStreet notes, “The 5, 10-day MA tend south, indicating the short-term bias remains bearish. However, the daily chart shows the relative strength index (RSI) has diverged in the NZD-positive manner. So, a move above the 10-day MA of 0.70 cannot be ruled out. Resistance: 0.70 (10-day MA), 0.7053 (May 4 high), 0.7073 (Jan. 3 low). Support: 0.6949 (May 9 low), 0.6903 (previous day's low), 0.6816 (Dec. 1 low).”