NZD/USD climbs to daily highs near 0.6370 on broad USD weakness

• The US Dollar Index is correcting last week's rally.
• Electronic Card Retail Sales data from New Zealand came in below expectations.
• The market action is likely to remain subdued in the second half of the day.

The NZD/USD pair lost more than 100 pips last week weighed by the broad-based USD strength and uncertainty surrounding the United States (US) - China trade dispute. With the lack of significant fundamental drivers paving the way for a technical rebound, the pair is edging higher on Monday and was last seen trading at 0.6368, up 0.63% on a daily basis.

Although several reports last week suggested that the US and China have agreed to roll back tariffs mutually as part of the phase-one of the trade deal, US President Donald Trump on Friday said that he hasn't yet decided if he would agree to reductions of tariffs to pour cold water on hopes of sides reaching a long-term trade deal.

RBNZ is expected to cut its policy rate

Meanwhile, the data released at the start of the week from New Zealand revealed that Electronic Card Retail Sales in October contracted by 0.6% on a monthly basis to fall short of the market expectation for a no-change. Later this week, on Wednesday, the Reserve Bank of New Zealand is expected to cut its policy rate by 25 basis points.

In a recently conducted poll, “Twelve out of 15 analysts expected the Reserve Bank of New Zealand (RBNZ) would cut rates to 0.75% this week from the current 1%," said Reuters. "All 13 economists who forecast beyond this week's meeting expected the bank to have cut rates by at least 25 basis points by the end of next year, with ANZ Bank forecasting rates would be as low as 0.25%."

On the other hand, the US Dollar Index is retracing last week's rally to help the pair recover its losses. At the moment, the index is down 0.15% on the day at 98.25. With the bond markets being closed due to Veterans Day in the US on Monday, the market action is likely to remain subdued in the second half of the day. 

Technical levels to watch for