NZD/USD: Bulls flirt with 0.7100 after posting the biggest gains in two months

• NZD/USD wavers around one-week high following the previous day’s heavy run-up.
• Business NZ PMI grew past-51.7 prior, REINZ House Price Index eased to 3.0% in November.
• Risks wobble, US dollar drops as vaccine hopes battle tiring talks on US stimulus, Brexit.
• No major data on the calendar left for watching in Asia, risk catalyst to keep the driver’s seat.

NZD/USD remains the bull’s favorite despite slowing down off-late near the weekly top of 0.7105, at 0.7098 during the early Friday morning in Asia. The kiwi pair recently pierced the 0.7100 round-figure after mixed prints of domestic data. It’s worth mentioning that the quote marked the heaviest rise since early October amid broad US dollar weakness during Thursday.

Having witnessed a downbeat print of New Zealand’s REINZ House Price Index for November, 3.0% MoM versus 3.5% prior, Business NZ PMI for the said month rose to the four-month high of 55.7. Additional details suggest that New Zealand Food Price Index dropped 0.9% compared to the previous contraction of 0.7% on monthly basis.

While mixed data at home confuse the NZD/USD bulls, the broad US dollar weakness seems to favor the quote’s north-run amid a lack of major change in the key risk catalysts.

The market sentiment remains sluggish as US policymakers keep jostling over the much-awaited coronavirus (COVID-19) aid package while the odds of a no-deal Brexit increase. Further to weigh on the quote could be the worsening of the virus conditions in America and a surge in the weekly Jobless Claims, coupled with the sluggish inflation data. On the positive side, hopes of the COVID-19 vaccine join the ECB’s additional stimulus.

Against this backdrop, Wall Street benchmarks closed mixed while the US 10-year Treasury yields and the US dollar dropped on Thursday. The same helped Antipodeans to remain strong despite not to risk-positive sentiment.

Given the lack of major data/events up for publishing on the calendar, NZD/USD traders should look for any positives for risk events, like US stimulus, vaccine and Brexit, for further upside. Though, the absence of which may consolidate the kiwi pair’s recent heavy gains.

Technical analysis

NZD/USD buyers are waiting for a clear break above the monthly high near 0.7105 to challenge the March 2018 low surrounding 0.7150. Although overbought RSI conditions suggest a pullback towards 0.7055/50, the further downside will be challenged by the 0.7000 threshold.