- The NZD / USD drew some buying in the dips near 0.6950 on Monday amid a renewed USD sell bias.
- Dovish Fed expectations, falling US bond yields, and risk appetite undermined the safe-haven dollar.
- Concerns about the fast-spreading delta variant could act as a headwind and limit gains.
The pair NZD / USD it maintained its modest intraday gains during the first half of the European session and was last seen near the daily highs, around the 0.6985 region.
After an initial drop to 0.6950, the NZD / USD pair attracted some buying on the dips on the first day of a new trading week and halted the fall of Friday’s retracement from the 07020 region, or two-week highs. A moderate demand for US dollars was seen as a key factor that extended some support to the main amid the risk boost in the markets, which tends to benefit the kiwi perceived as riskier.
The USD index approached a month-long lows amid market expectations that the Fed will maintain its ultra-loose monetary policy stance for a longer period. This was bolstered by the ongoing decline in US Treasury yields, back near multi-month lows. Apart from this, a generally positive risk tone was seen as another factor that undermined the dollar as a safe haven.
That said, concerns that the rapidly spreading Delta variant of the coronavirus could derail the global economic recovery could act as a headwind for the NZD / USD pair. Investors can also refrain from making aggressive bets, instead preferring to wait on the sidelines before Friday’s release of the monthly US jobs report, popularly known as the NFP.
Meanwhile, Monday’s release of the US ISM Manufacturing PMI, along with US bond yields, could influence USD price dynamics later in the US session. . Traders could follow the signs of events related to the coronavirus saga and overall market risk sentiment to seize some short-term opportunities around the NZD / USD pair.
Technical levels
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