• NZD/USD picks up bids to refresh daily tops, edges higher around monthly top.
• RBNZ’s Convay sees softer inflation in H2 2022, shows readiness to pull back the rates if needed.
• US dollar pause previous south-run around monthly low as market sentiment dwindles amid US bank holiday, light calendar.

NZD/USD remains on the front foot near the monthly top, grinding higher surrounding 0.6550 by paying a little heed to comments from the Reserve Bank’s new Chief Economist Paul Conway early during Monday’s Asian session.

RBNZ’s Convay saw lower domestic inflation during the second half of 2022 while saying, “If economic indicators change can revisit cash rate track.” The newly arrived policymaker, however, showed confidence that New Zealand’s central bank could guide the economy to a “soft landing” despite raising rates.

It’s worth noting that the US bank holiday and a light calendar, as well as a sluggish US dollar, seem to help the NZD/USD prices remain firmer despite mixed comments from the RBNZ official.

Also supporting the Kiwi pair could be the cautious optimism in the markets amid hopes of softer Fed rate hikes due to the recently downside US data relating to inflation.

That said, the risk-on mood portrayed by the 0.40% intraday gains of S&P 500 Futures also underpin the NZD/USD pair’s upside momentum. A steady decline in China’s covid numbers seemed to have helped keep the market’s risk-appetite intact of late.

Considering the firmer sentiment and softer USD, not to forget the light calendar and the US bank holiday, NZD/USD prices may extend the previous upside momentum. However, any rally in the Kiwi pair prices becomes less anticipated amid fears of growth and inflation.

Technical analysis

The monthly high surrounding 0.6570 appears important resistance for the NZD/USD buyers to cross to keep reins. Failing to do so can trigger a pullback towards a fortnight-old rising trend line, around 0.6420 by the press time.