NZD/USD flirts with one-week tops, above mid-0.6900s
- NZD/USD edged higher for the third straight day and inched back closer to one-week tops.
- A generally positive risk tone was seen as a key factor benefitting the perceived riskier kiwi.
- A modest USD strength might cap gains ahead of the release of US Durable Goods Orders.
The NZD/USD pair scaled higher through the first half of the European session and climbed to fresh daily tops, around the 0.6960 region in the last hour.
The pair gained traction for the third successive session on Wednesday and moved back closer to one-week tops touched in the previous session. A generally positive risk tone was seen as a key factor that extended some support to the perceived riskier kiwi. That said, a modest US dollar strength might keep a lid on any further gains for the NZD/USD pair.
Concerns about the fast-spreading Delta variant eased after China said that it had stopped the community spread of COVID-19. Adding to this, the US Food and Drug Administration (FDA) granted full approval to the Pfizer/BioNTech COVID-19 vaccine. The development raised hopes that inoculations in the US could accelerate and restored investors' confidence.
On the other hand, some follow-through uptick in the US Treasury bond yields assisted the USD to move away from one-week lows touched in the previous session. In fact, the yield on the benchmark 10-year US government bond climbed back to the 1.30% threshold amid expectations that the Fed might still begin rolling back its pandemic-era stimulus in 2021.
Investors might also be reluctant, rather prefer to wait on the sidelines ahead of Fed Chair Jerome Powell's speech at the Jackson Hole Symposium later this week. This, in turn, warrants some caution before placing aggressive bullish bets around the NZD/USD pair and positioning for any further appreciating move.
Market participants now look forward to the US economic docket, highlighting the release of Durable Goods Orders later during the early North American session. This, along with the US bond yields, might influence the USD. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities around the NZD/USD pair.
Technical levels to watch