NZD/USD: awaits a catalyst, technicals are bearish below 10-D SMA

• NZD/USD: glued within a tight range either side of 0.70 the figure.
• NZD/USD: inflation expectations in the RBNZ survey.

NZD/USD has been testing territory back below the 0.70 handle in recent trade while consolidating within the sideways channel for the month of May. Currently, NZD/USD is trading at 0.7012, down -0.09% on the day, having posted a daily high at 0.7043 and low at 0.6995.

NZD/USD has been mostly flat on the day with markets subdued due to holiday's in the UK and London traders out enjoying a bank holiday Monday for early May. 

"NZD will open today in the middle of the 0.7000-0.7050 range established last week. Today, the focus will be on inflation expectations in the RBNZ survey. That said, NZD is unlikely to react strongly to the data. Global risk sentiment will be key for the next leg in the currency with a real risk of testing sub-0.70 again this week," analysts at ANZ explained.

Fundawrap: geopolitics back in vogue, oil above $70 is significant

Iran in focus

For the week ahead, the focus will be on US data where CPI is due towards the end of the week. There will also be keen interest in trade talk developments with NAFTA and China in focus. However, the near-term risk stays with Iran.

"UK foreign minister Johnson spoke on US TV networks in favour of keeping the deal while there were competing headlines about the chances that President Trump might change his mind," analysts at Westpac explained, adding, "it seems highly unlikely that Trump will keep the US in the deal, which analysts expect will limit Iran’s oil export volumes. This has been a factor in driving oil prices to highs since late 2014. Brent crude has risen 18% since early March. Trump tweeted that the announcement will be at 2pm Tuesday NY time."

NZD/USD levels

The 10-D SMA is the first hurdle to the upside, located at 0.7048, however, technicals continue to lean bearish still with the RSIs biased to the downside. Support is at 0.6880 on the wide and resistance is at 0.7020 (21-4hr SMA) and 0.7180 on the wide.