NZD / USD rises to new one-month highs and approaches the 0.7200 level

• The NZD / USD captures some buying on Monday amid a new sell bias around the USD.
• Diminishing expectations of a Fed rate hike and falling US bond yields continue to weigh on the USD.
• Concerns about rising COVID-19 cases could limit any further gains for the pair.

The pair NZD / USD has built on its steady intraday recovery, from the three-day lows previously reached during the Asian session, and has risen to fresh one-month highs near the 0.7200 level during the European session on Monday.

The pair has started the week with a modest bearish gap on the first day of a new trading week, although it has lacked subsequent selling and has captured some buying near the 0.7125-20 region. Renewed fears about another dangerous wave of coronavirus infections globally weighed on investor sentiment and turned out to be a key factor weighing on the perceived higher risk NZD.

However, Diminishing odds of an earlier rate adjustment by the Fed has kept US dollar bulls on the defensive and has offered some support to the NZD / USD pair. Despite strong US economic data, investors seem convinced that the Fed will keep rates near zero for a longer period. The USD has been further pressured by the recent decline in US Treasury yields.

It is worth reporting that the yield on the 10-year US government bond has fallen further from a high of more than a year at 1.7760% reached in March and plunged to 1.5280% last week. This, in turn, has been seen as another factor that could continue to weigh on the dollar and supports the prospects for a further short-term bullish move for the NZD / USD pair.

There is no major economic data release from the US Therefore, US bond yields could continue to play a key role in influencing USD price dynamics. Aside from this, broader market risk sentiment should allow investors to seize some short-term opportunities around the NZD / USD pair, although nervousness around COVID-19 could limit gains.

NZD / USD technical levels