NZD/USD clings to gains near session tops, bulls await a move beyond mid-0.7200s
- NZD/USD caught aggressive bids on the first day of the week amid the prevalent USD selling bias.
- Vaccine optimism remained supportive of the risk-on mood and undermined the safe-haven USD.
- Sustained strength beyond the 0.7250 level should pave the way for some follow-through strength.
The NZD/USD pair refreshed daily tops during the early European session, with bulls making a fresh attempt to build on the momentum further beyond mid-0.7200s.
The pair gained strong positive traction on the first day of a new trading week and recovered further from one-week lows, around the 0.7175 region touched on Friday. The prevalent risk-on mood undermined the US dollar's relative safe-haven status and was seen as a key factor driving the NZD/USD pair higher.
The global risk sentiment remained well supported by the progress in the rollout of vaccines for the highly contagious coronavirus diseases. Apart from this, firming expectations for a massive US fiscal spending plan has been fueling hopes for a strong global economic recovery and boosting investors' confidence.
Meanwhile, the likelihood for the passage of the US President Joe Biden's proposed $1.9 trillion COVID-19 stimulus package pushed the yield on the benchmark 10-year bond beyond the 1.20%. This marks the highest levels since February 2020, albeit failed to provide any respite to the USD or cap the NZD/USD pair.
From a technical perspective, a sustained strength beyond the 0.7250 strong horizontal support will be seen as a fresh trigger for bullish traders. This, in turn, will set the stage for a further near-term appreciating move towards the 0.7300 round-figure mark amid absent relevant market moving economic releases.
Technical levels to watch