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  • A slight deterioration in the global risk sentiment exerts some pressure.
  • The USD further extracts additional support from rising US bond yields.
  • US-China trade optimism seemed to help limit any meaningful downside.

The NZD/USD pair failed to capitalize on the early uptick to near four-week tops and is currently placed at the lower end of its daily trading range, still comfortably above the 0.6400 handle.
The pair continued with its struggle to make it through the 0.6440-45 horizontal resistance, with a slight deterioration in the global risk sentiment benefitting the US Dollar’s safe-haven status and driving some flows away from perceived riskier currencies – like the Kiwi.

Risk-off mood/a modest USD strength weigh

Adding to this, a modest pickup in the US Dollar demand, supported by a follow-through uptick in the US Treasury bond yields, exerted some additional downward pressure and collaborated to the pair’s intraday pullback of around 20-pips, though bears seemed lacking strong conviction.
The recent optimism over the resumption of the US-China trade negotiations, confirmed by the US President Donald Trump on Monday, might continue to lend some support to commodity-linked currencies and turn out to be one of the key factors that should limit deeper losses.
There isn’t any major market-moving economic data due for release on Tuesday and hence, the broader market risk sentiment, coupled with the USD price dynamics might continue to act as key determinants of the pair’s momentum and produce some short-term trading opportunities.

Technical levels to watch