NZD/USD Bulls Assault 0.6550 Despite Rbnz's Convay's Cautionary Tone

NZD/USD remained bullish above the monthly high, grinding higher around 0.6550 in response to remarks from the Reserve Bank's new Chief Economist Paul Conway during the Asian session on Monday.

RBNZ's Convay anticipated a decline in domestic inflation during the second half of 2022 and stated, "If economic data change, cash rate track may be reconsidered." Despite rate hikes, the freshly arrived policymaker was optimistic that the New Zealand central bank could guide the economy to a "soft landing."

Notably, the US bank holiday, a light calendar, and a sluggish US dollar appear to have helped the NZD/USD exchange rate remain firmer despite the RBNZ official's contradictory comments.

In addition to the cautious optimism on the markets and expectations of slower Fed rate hikes due to recent negative US inflation statistics, the New Zealand dollar may be supported by the New Zealand dollar.

However, the risk-on sentiment illustrated by the 0.40 percent intraday gains of S&P 500 Futures also supports the upward trend of the NZD/USD pair. A continuous fall in China's covid levels appeared to have helped maintain the market's appetite for risk in recent times.

Taking into account the improved attitude and weaker USD, as well as the light economic calendar and the US bank holiday, the NZD/USD exchange rate may prolong its recent upward momentum. Concerns about GDP and inflation diminish the likelihood of a price increase in the Kiwi-dollar pair.

Technical evaluation

The monthly high surrounding 0.6570 appears significant resistance for NZD/USD buyers to overcome in order to maintain control. Failing to do so may result in a pullback towards a two-week-old rising trend line, which was about 0.6420 at the time of publication.