- NZD/USD continued scaling higher for the third consecutive session on Thursday.
- The prevalent risk-on mood undermined the safe-haven USD and benefitted kiwi.
- Hopes for a global economic recovery, more US fiscal aid boosted risk sentiment.
The NZD/USD pair now seems to have entered a consolidation phase and was seen oscillating in a range around the 0.7220-25 region, just below fresh 32-month tops set earlier today.
The pair added to this week’s positive move and continued gaining traction for the third consecutive session on Thursday. Growing hopes for a global economic recovery in 2021 remained supportive of the underlying bullish tone in the equity markets, which, in turn, benefitted the perceived riskier kiwi.
Apart from this, the likelihood of additional US financial aid and expectations that the Fed will keep interest rates lower for a longer period further undermined demand for the safe-haven US dollar. This contributed to the momentum and pushed the NZD/USD pair to the highest level since April 2018.
That said, overbought conditions on short-term charts held investors from placing fresh bullish bets amid relatively thin liquidity conditions on the back of year-end holiday season. Nevertheless, the bias still seems tilted in favour of bullish traders and supports prospects for additional gains.
Market participants now look forward to Thursday’s US economic docket – highlighting the only release of usual Initial Weekly Jobless Claims. This, along with the broader market risk sentiment, might influence the USD price dynamics and produce some trading opportunities around the NZD/USD pair.
Technical levels to watch
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