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  • NZD/USD bullish momentum after renewing multi-month highs at 0.6580.
  • US Dollar Index rebounds toward 97.00 on Tuesday.
  • Focus shifts to mid-tier macroeconomic data releases from US.

The NZD/USD pair edged higher during the early Asian session on Tuesday and touched its highest level since late January at 0.6581. However, with the risk rally losing its steam, the pair lost its traction and staged a deep correction. As of writing, NZD/USD was trading at 0.6480, losing 1.2% on a daily basis.

Negative sentiment weighs on NZD/USD

There were no macroeconomic data releases from New Zealand on Tuesday and the NZD struggled to find demand as the risk rally lost steam. The World Health Organization (WHO) Director-General Tedros Adhanom Ghebreyesus warned that the coronavirus pandemic was “far from over.” Additionally, the latest data revealed that there were 136,000 new confirmed cases of coronavirus infection on Monday, the highest daily increase recorded so far. 

Reflecting the dismal market mood, major European equity indexes are losing between 1.5% and 2% and the S&P 500 futures are erasing more than 1%.

Meanwhile, the USD seems to be capitalizing on risk-off flows. The US Dollar Index (DXY), which closed the first day of the week with a loss of 0.25%, was last seen gaining 0.25% on the day at 96.95.

Later in the day, the IBD/TIPP Economic Optimism Index and JOLTS Job Openings will be released from the US. On Wednesday, Manufacturing Sales will be featured in New Zealand’s economic docket.

Technical levels to watch for

 

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