NZD/USD mildly bid above 0.70, focus on RBNZ

• NZD/USD seems to have found a temporary bottom below 0.70.
• The RBNZ rate decision is the highlight of the week.

The NZD/USD is reporting moderate gains on Monday, having created a bullish relative strength index (RSI) divergence in the 4-hour chart last week.

As of writing, the pair is trading at 0.7028 and is eyeing a break above 0.7044 (50-candle MA in the 4-hour chart). NZD/USD hit a four-month low of 0.6985 last week as the greenback rallied across the board on the rising probability that Fed would hike rates three more times this year.

However, the oversold conditions as highlighted by the daily RSI and the bullish RSI divergence in the short duration charts seem to have put a bid under the Kiwi.

Focus on the RBNZ

The RBNZ will likely hold the official cash rate at 1.75 percent this Thursday. The investors will be on the lookout for Governor Orr's take on inflation, the recent decline in the NZD and the new mandate of employment.

NZD/USD Technical Levels

A close above the descending (bearish 10-day moving average) of 0.7046 would indicate the sell-off from the high of 0.7395 has ended and could yield a corrective rally to 0.7096 (April 27 high) and 0.7142 (38.2 percent Fibonacci retracement).

On the downside, failure to hold above the session low of 0.7014 would open the doors to 0.6985 (last week's low) and 0.6945 (Dec. 12 low).