NZD/USD surges to fresh two-month highs, fast approaching 0.71 handle

The NZD/USD pair continued gaining traction through mid-European session and built on to its break-out momentum above 100-day SMA important hurdle.

The New-Zealand Dollar remained underpinned by last week's government budget, expecting to post a larger surplus in 2017 and planning to invest in infrastructure to fuel the economic growth. 

   •  NZ Budget: Fiscal outperformance allows a looser stance – HSBC

Adding to this, political turmoil in the US, raising doubts over the US President Donald Trump's ability to push through pro-growth economic policies and leading to a sharp slide in the US treasury bond yields continued driving flows towards higher-yielding currencies - like the Kiwi, and collaborated to the pair's up-surge to its highest level since March 21.

Currently placed at fresh two-month tops, the pair's sharp up-tick of around 20-pips in the past hour or so could be attributed to some short-covering in wake of a sustained strength above 0.7070 horizontal resistance.

It, however, remains to be seen if the up-move is backed by genuine buying interest or turns out to be a short-run amid holiday thinned trading conditions on the back of a bank holiday in the US.

Technical levels to watch

The ongoing momentum seems strong enough to lift the pair beyond the 0.7100 handle towards testing its next major hurdle near 0.7115 region (200-day SMA). On the flip side, any retracement now seems to find immediate support at 100-day SMA near 0.7055-50 region, which if broken might trigger a profit taking slide back towards 0.7025-20 horizontal support en-route the key 0.70 psychological mark.