NZD/USD extends steady recovery from 31-month lows, nearing mid-0.6500s

   •  A modest USD retracement prompts some short-covering from oversold conditions.
   •  Improving risk appetite provides an additional boost and remains supportive.

The NZD/USD pair has managed to rebound around 30-pips from a 31-month low level of 0.6512 and is currently placed at the top end of its daily trading range. 

Uncertainty surrounding escalating US-China trade tensions continues to dominate markets at the start of a new trading week. This, against the backdrop of Friday's upbeat US jobs report, kept exerting downward pressure on the major.

The US Dollar, however, failed to capitalize on the post-NFP upsurge and remained on the back-foot through the early North-American session, which was seen as one of the key factors behind the pair's steady recovery from the lowest level since early-Feb. 2016. 

Meanwhile, a slight improvement in investors’ appetite for riskier assets, as depicted by a goodish pickup across European equity markets and indications of a stronger opening across the US bourses, further weighed on the greenback's relative safe-haven status on remained supportive of the up-move.

It, however, remains to be seen if the uptick is backed by any genuine buying or is just a short-covering move, especially after the recent downfall of around 215-pips over the past two weeks or so and amid near-term oversold conditions.

In absence of any major market moving economic releases, the USD price dynamics might continue to act as an exclusive driver of the pair's momentum as market participants look forward to Atlanta Fed President Raphael Bostic's scheduled speech for some fresh impetus.

Technical levels to watch

Immediate resistance is pegged near the 0.6565 region, above which the pair is likely to aim towards reclaiming the 0.6600 handle before eventually heading towards the 0.6620 supply zone. 

On the flip side, weakness back below the 0.6530-25 region might now turn the pair vulnerable to break below the key 0.6500 psychological mark and test its next support near mid-0.6400s.