NZD / USD rises above 0.7225 and approaches multi-year highs

• The NZD / USD captures new purchases on the first day of 2021 amid a sustained selling bias of the USD.
• Risk appetite sentiment is seen as a key factor weighing on the USD as a safe haven.
• The bulls do not appear to be affected by Monday’s release of the Chinese manufacturing PMI.

The pair NZD / USD moves higher during the European session on Monday and rises above the 0.7225 level.

Following the previous day’s pullback of around 60 pips, the pair has captured some new buying on the first trading day of 2021 and is holding near multi-year highs. Underlying market optimism has continued to weigh on the safe-haven US dollar and has been seen as a key factor that has benefited the NZD., of higher perceived risk.

Mass distribution of vaccines has helped offset concerns about the newer strain of coronavirus spreading more rapidly. This, along with hopes for a strong global economic recovery, has continued to support the risk appetite. Furthermore, expectations that the Fed will hold rates lower for a longer period has kept USD bulls on the defensive.

Meanwhile, a good recovery in US Treasury yields has not served either to give the USD a break or to halt the intraday rally in the NZD / USD pair. The bulls have also seemed rather nonchalant and largely have ignored Monday’s unimpressive Chinese manufacturing PMI, which unexpectedly fell to 53.0 points in December from 54.9.

With USD price dynamics proving to be a unique driver of the NZD / USD movement, market participants are now awaiting the release of the final US Manufacturing PMI for further momentum. Apart from this, the developments around the coronavirus saga should influence the broader risk sentiment and produce some trading opportunities around the NZD / USD pair.

NZD / USD technical levels