Bank of New Zealand senior markets strategist Jason Wong said in a research note that he expected it to remain anchored around the 70 US cents to 71 US cents mark for much of the rest of the year and it has strong technical support in the 68-69 cents zone.
"Fundamentally, the NZD doesn't deserve to go much lower than that," in particular given the positive terms of trade, said Wong.
"There was a good squeeze [in the kiwi overnight] and the kiwi has clearly found a base around 68.50 US cents," said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.
He said it underperformed against the Australian dollar slightly but that was likely because of weaker-than-expected first quarter retail sales data Monday.
The kiwi traded at 91.62 Australian cents from 91.70 cents yesterday, with Australia's currency also a bigger beneficiary from the cooling trade tensions.
Kelleher warned the issue of Mycoplasma bovis could still impact the currency as the investors move to factor in the possible loss of production as well as potential management costs.
"No-one has put a number on anything here" but its definitely a risk factor, he said.
Agriculture and Biosecurity Minister Damien O'Connor reiterated Tuesday the government and farming industry representatives would decide on eradication or long-term management by next week.
The kiwi rose to 4.4258 Chinese yuan from 4.3999 yuan yesterday and gained to 58.95 euro cents from 58.69 cents yesterday. It traded at 77.01 yen from 76.72 yen yesterday and gained to 51.74 British pence from 51.33 pence.
New Zealand's two-year swap rate fell 1 basis points to 2.19 per cent while 10-year swaps fell 3 basis points to 3.19 per cent.
