The overnight washout on the back of the US involvement in the Iran/Isreali conflict, sent the NZDUSD sharply lower. The tumble sent the pair into a well supported swing zone (0.5900-0.5882) and tagged the May extreme low at 0.5882. Dip-buyers stepped in aggressively as the dollar buying turned to dollar selling with Fed Bowman's dovish comments, lower yields and then the dud of a retaliatory strike against US military base in Qatar. The pair has now retraced the entire move lower and is higher on the day (the current price is at 0.5971 vs the close on Friday at 0.5961). The price is also back above the 50% midpoint of the move up from the May low to the June high at 0.5966.

For the rally to gather traction, the pair now needs to stay above the 50 % retracement at 0.5966 and below it, the swing low from last week's trading at 0.5958.. Staying above, keeps the buyers in firm control and buyers can work toward the 100 hour MA at 0.5985 followed by the broken 38.2% at 0.5995. The 200 hour MA comes in at 0.6013 and would be the next logical cap on the topside.

Conversely, move below 0.5958 – the most recent breakout shelf – would tilt the bias more to the downside. A failure there would undermine the rebound and expose the 61.8 % retrace at 0.5938, with the door then re-opening toward the 0.5900 area.