- Renewed USD selling bias assisted NZD/USD to gain strong positive traction on Wednesday.
- Concerns about the ever-increasing COVID-19 cases in the US continued weighing on the USD.
- A modest rebound in the US equity futures further drove flows to the perceived riskier kiwi.
The NZD/USD pair added to its intraday gains and shot to the highest level since March 2019, around the 0.6925 region during the early European session.
Following an early dip to the 0.6875 region, the pair regained positive traction on Thursday and built on its recent strong bullish trajectory from sub-0.6600 levels, or monthly lows. The uptick was exclusively sponsored by the emergence of some fresh selling around the US dollar.
Despite promising developments in late-stage vaccine trials, investors remain concerns about the potential economic fallout from the imposition of new coronavirus restrictions in several US states. This, in turn, was seen as a key factor that kept the USD bulls on the defensive.
The greenback was also pressured by the ongoing slide in the US Treasury bond yields. This, along with a goodish rebound in the US equity futures, further undermined the USD’s relative safe-haven status and provided an additional boost to perceived riskier currencies, including the kiwi.
The intraday positive momentum took along some short-term trading stops near the 0.6905-10 region. Hence, some follow-through strength beyond the 0.6940 region, towards testing December 2018 swing highs near the 0.6970 level, now looks a distinct possibility.
Market participants now look forward to the US housing market data – Building Permits and Housing Starts – for some impetus. Apart from this, developments surrounding the coronavirus saga will influence the USD price dynamics and produce some trading opportunities around the NZD/USD pair.
Technical levels to watch
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