- The NZD / USD captures some new buying on Tuesday amid a renewed USD sell bias.
- The underlying bullish sentiment continues to weigh on the safe-haven USD.
- Nervousness over COVID-19 could dampen enthusiasm and limit the pair’s rise.
The pair NZD / USD has moved higher during the Asian session on Tuesday and has risen above the 0.7200 level again. At the time of writing, the pair remains close to the daily highs around the 0.7215-20 region.
The pair has managed to regain positive traction on Tuesday and, for now, seems to have ended two consecutive days of negative movement. The rally is driven by the emergence of new selling around the US dollar and has pushed the NZD / USD pair close to multi-year highs.
The USD has struggled to capitalize on the good rebound of the previous day, from the lows of two and a half years, amid uncertainty about the second round of US elections in Georgia. The result of two Senate seats will have a major impact on the ability of incoming US President Joe Biden to pursue his preferred economic policies.
Apart of this, hopes for a strong global economic recovery in 2021 and the likelihood of an additional fiscal aid package in the United States they have continued to support underlying bullish sentiment in financial markets. This has been seen as another factor that continues to weigh on the demand for the safe haven of the US dollar.
Having said that, growing market concerns about the continued rise in new COVID-19 cases, which resulted in the imposition of new lockdown measures in the UK, have tempered enthusiasm. This, in turn, could extend some support to the USD and limit any uncontrolled movements for the NZD / USD pair.
This makes it prudent to wait for some solid continuation buying above the 0.7230-40 region before positioning for any further bullish movement. The subsequent momentum could help the NZD / USD pair to aim to regain the round level of 0.7300 for the first time since April 2018.
Market participants are now awaiting the US economic calendar, highlighted by the ISM manufacturing PMI release. Apart from this, the events around the coronavirus saga could influence the USD price dynamics and generate some short-term trading opportunities around the NZD / USD pair.
NZD / USD technical levels
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