- A softer tone around the USD helped the NZD / USD continue to gain ground on Tuesday.
- The uncertain political environment in the United States was seen as a key factor weighing on the dollar.
- Nervousness over the coronavirus could provide some support for the dollar as a safe haven and limit the pair’s gains.
The pair NZD / USD it shot to fresh five-week highs during the early days of the American session and is now looking to extend momentum above 0.6700.
The pair built on last week’s solid bounce from 0.6550 and continued to gain traction through most of Tuesday’s trading action. The US dollar fell amid the uncertain US political environment, which, in turn, was seen as one of the key factors that pushed the NZD / USD pair higher.
Investors may have started to value a strong victory for Democratic candidate Joe Biden in the upcoming US presidential election on November 3. However, incoming polls have been indicating a small difference in certain key states, fueling uncertainty about the actual result and weighed on the dollar.
However, growing market concerns about the possible economic impact of the new lockdown measures to curb the second wave of coronavirus infections weighed on investor sentiment. This, coupled with slow progress in the US stimulus talks, further dampened market sentiment and helped limit any sharp decline for the safe-haven dollar.
The dollar remained depressed and could not get a respite after Tuesday’s upbeat release of US durable goods order data In fact, major orders posted strong growth of 1.9% month-on-month in September while Orders excluding transportation increased 0.8% versus expected growth of 0.5% and 0.4%, respectively.
From a technical perspective, the NZD / USD pair already appears to have found acceptance above the 0.6670 offer zone. Therefore, some tracking strength towards the 0.6755-60 region, en route to 0.6800, now seems like a clear possibility. The latter coincides with the monthly swing highs for September, which if exceeded should pave the way for additional gains.
Credits: Forex Street
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