NZD/USD sits near one-month tops, looking to build on momentum beyond 0.7250
- A combination of factors continued driving NZD/USD higher for the third straight session.
- The underlying bullish sentiment dented the USD’s safe-haven status and benefitted kiwi.
- Retreating US bond yields further undermined the greenback and remained supportive.
The NZD/USD pair shot to one-month tops on Tuesday, with bulls now looking to build on the momentum further beyond the 0.7240-50 heavy supply zone.
The pair built on last week's positive move and gained some follow-through traction for the third consecutive session amid the emergence of some fresh selling around the US dollar. Friday's unimpressive US jobs report raised doubts about a relatively faster US economic recovery from COVID-19 and halted the recent USD rally to more than two-month highs.
This, along with the underlying bullish sentiment in the financial markets, further undermined the greenback's relative safe-haven status and benefitted the perceived riskier kiwi. The global risk sentiment remained well supported by the progress in coronavirus vaccinations and the likelihood of massive US fiscal stimulus measures to support the economy.
Meanwhile, developments to fast-track the US President Joe Biden's proposed $1.9 trillion stimulus package pushed the yield on the benchmark 10-year government bond to the highest level in a year on Monday. However, a modest pullback in the US Treasury bond yields exerted some additional pressure on the greenback and provided an additional boost to the NZD/USD pair.
The pair has now moved on the verge of confirming a near-term bullish breakout and some follow-through buying should set the stage for a further near-term appreciating move. Hence, a subsequent move towards the 0.7300 mark, en-route multi-year tops, around the 0.7315 region touched on January 6, now looks a distinct possibility amid absent relevant US economic data.
Technical levels to watch