- NZD/USD gained positive traction for the second consecutive session on Tuesday.
- The upbeat market mood undermined the safe-haven USD and benefitted the kiwi.
- A sustained move beyond the 0.7240-50 area has set the stage for additional gains.
The NZD/USD pair maintained its strong bid tone through the early European session and was last seen trading above mid-0.7200, or over one-month tops.
The pair added to the previous day’s positive move and gained follow-through traction for the second consecutive session on Tuesday. The prevalent upbeat market mood undermined the US dollar’s relative safe-haven status and was seen as a key factor that benefitted the perceived riskier currencies, including the kiwi.
The global risk sentiment remained well supported by the progress in vaccination for the highly contagious coronavirus disease. This, along with expectations for a massive US fiscal spending plan, has been fueling the optimism about a strong global economic recovery and remained supportive of the ongoing rally in the equity markets.
Meanwhile, the US bond market continued reacting strongly to the prospects for the passage of President Joe Biden’s proposed $1.9 trillion COVID-19 stimulus package. In fact, the yield on the benchmark 10-year US government bond jumped to the highest level since February 2020, albeit did little to impress the USD bulls.
With Tuesday’s strong move up, the NZD/USD pair has now found acceptance above the 0.7240-50 strong horizontal resistance. This might have already set the stage for a further near-term appreciating move. Hence, a subsequent move towards the 0.7300 mark, en-route multi-year tops near the 0.7315 area, now looks a distinct possibility.
In the absence of any major market-moving economic releases from the US, the broader market risk sentiment will continue to play a key role in influencing the NZD/USD pair. Apart from this, the US bond yields and the USD price dynamics will also be looked upon for some short-term trading opportunities.
Technical levels to watch
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