NZD/USD retreats further from 4-week tops, slides below mid-0.6500s

• NZD/USD failed to capitalize on its early uptick to four-month tops, around 0.6580 level.
• Concerns about surging coronavirus cases globally weighed on the global risk sentiment.
• A softer risk tone benefitted the safe-haven greenback and prompted some profit-taking.

The NZD/USD pair extended its retracement slide from four-week tops and was last seen trading near session lows, around the 0.6535 region.

The pair witnessed an intraday turnaround from the 0.6580 region, just ahead of multi-month tops set on June 6 and was being pressured by a modest pickup in the US dollar demand. Monday’s upbeat US ISM Non-Manufacturing PMI indicated that the economy has already started to recover and provided a much-needed respite to the USD bulls.

Meanwhile, investors remain concerned that the ever-increasing coronavirus cases globally could trigger renewed lockdown measures and delay economic recovery. The worries led to a modest pullback in the equity markets, which provided an additional boost to the safe-haven USD and drove flows away from the perceived riskier kiwi.

It will now be interesting to see if the NZD/USD pair is able to attract any buying interest or continues with its corrective slide. A subsequent fall below the key 0.6500 psychological mark will point to the formation of a bearish double-top near the 0.6580-85 region and suggest that the recent positive move might have already run out of the steam.

There isn’t any major market-moving economic data due for release on Tuesday. Hence, the broader risk sentiment, along with developments surrounding the coronavirus saga will influence the USD price dynamics and produce some meaningful trading opportunities around the NZD/USD pair.

Technical levels to watch