- The NZD / USD builds on the positive movement of the previous day and gains traction for the second day in a row.
- Risk appetite benefits NZD from perceived higher risk amid current USD retracement decline.
The pair NZD / USD has continued to move higher during the European session on Tuesday, rising to four-day highs around the 0.6940-45 region in the last hour.
A combination of factors has helped the NZD / USD pair to take advantage of the positive move from the previous day and gain some continuation traction for the second day in a row on Tuesday. With the last move up, the pair has now recovered over 130 pips from annual lows, around 0.6800, touched last Friday.
Investors were consoled after the US Food and Drug Administration (FDA) granted full approval to the Pfizer / BioNTech vaccine for COVID-19. This has been evident by a generally positive tone around equity markets, which has weighed on demand for the safe-haven USD and acted as a tailwind for the perceived riskier NZD.
That said, a good rally in US Treasury yields could help limit the current pullback in the US dollar from a nine-and-a-half month high. Investors too might be reluctant to open up any aggressive positions ahead of Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium, which warrants some caution before positioning for additional gains.
Market participants are now looking forward to the US economic calendar, with second-tier releases of new home sales and the Richmond Fed Manufacturing Index. The data could do little to provide significant momentum, although broader market risk sentiment could sway the USD and generate some opportunities around the NZD / USD pair.
NZD / USD technical levels
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