NZD/USD: Bears look to test 2018 lows at 0.6903

• Bears regain momentum as USD seeks to pullback.
• Monetary policy divergence continues to weigh down on the prices.

The offered tone around New Zealand keeps growing bigger as we head into the European session, now pushing the NZD/USD pair back towards the five-month lows of 0.6903 reached last week.

The sell-off in the spot regained momentum after the US dollar attempted a tepid recovery versus its main peers while persisting weakness in oil prices also add to the weight on the resource-linked Kiwi.

From a broader perspective, the Kiwi dollar remains vulnerable amid divergent monetary policy outlooks between the Fed and RBNZ, especially after RBNZ's Governor Orr surprised markets last week with a more dovish stance than expected, citing that a 'rate cut' was a real valid possibility.

Looking ahead, with an empty macro calendar, the focus will remain on the Fedspeaks and USD dynamics for fresh trading opportunities.

NZD/USD Technical Levels

Omkar Godbole, Analyst at FXStreet notes, “The oversold readings on the 14-day relative strength index (RSI) add credence to Friday's doji candle and indicate scope for a corrective rally. The gains could be limited as long as the short-term moving averages (MA) - 5-day MA and the 10-day MA are trending south in favor of the bears. Key resistance: 0.6985 (May 2 low), 0.7019 (23.6% Fib R of recent sell-off), 0.7053 (May 4 high). Key support: 0.6953 (session low), 0.6945 (Nov. 28 high), 0.69 (psychological support).”