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  • NZD/USD continued scaling higher for the second straight day on Tuesday.
  • The prevalent USD selling bias was seen as a key factor driving the pair higher.
  • Move beyond the 200-day SMA further prompted some short-covering move.

The USD bearish pressure remained unabated through the early North American session and lifted the NZD/USD pair to near three-month tops, around mid-0.6300s.

The pair added to the previous session’s breakout momentum above 100-day SMA and gained some strong follow-through traction for the second consecutive session on Tuesday. The bullish trajectory was sponsored by the prevalent US dollar selling bias and the upbeat market mood.

The greenback remained depressed in the wake of the widespread protests in dozens of American cities over the death of George Floyd. This coupled with growing optimism over a sharp V-sharp recovery for the global economy further undermined the sentiment surrounding the buck.

Investors’ confidence was evident from a positive trading sentiment around the equity markets, which provided an additional boost to perceived riskier currencies, including the kiwi. Bullish traders seemed rather unaffected by concerns about worsening US-China relations.

Meanwhile, the latest leg of a sudden spike over the past hour or so could further be attributed to some technical buying above the very important 200-day SMA around the 0.6310 region. Hence, it will interesting to see if the move up is backed by genuine buying or turns out to be a stop-run, which runs the risk of fizzling out rather quickly.

In the absence of any major market-moving economic releases from the US, the broader market risk sentiment and the USD price dynamics will continue to play a key role in influencing the pair’s momentum on Tuesday.

Technical levels to watch