NZD/USD: Bulls attack 0.6600 following risk-on mood

NZD/USD seesaws in a choppy range between 0.6770 and 0.6780 while keeping the previous day’s gains intact.

Markets cheered hops of vaccine, further stimulus amid a light calendar and greenback declines.

NZ Finance Minister Robertson showed readiness to provide more stimulus if needed.

RBA minutes and Aussie central banker Philip Lowe’s speech can entertain traders ahead of New Zealand Credit Card Spending for June.

NZD/USD picks up the bids around 0.6577/78 during the initial Asian session on Tuesday. Even so, the pair stays within the recently established range of 0.6570-80. The pair did flash a two-day winning streak the previous day while following the broad run-up in the commodity-linked currencies.

US dollar weakness joins upbeat sentiment…

Considering the inverse relations between the US dollar and commodities, not to forget the linked currencies, greenback weakness generally gains applauds from the buyers of these assets. Also adding strength to the upside momentum was the market’s risk-on sentiment.

Be it the surge in the coronavirus (COVID-19) or the fight against China, the US currency had to bear it all. The latest figures push the national total closer to 4.0 million new cases with Texas in the frontline. Elsewhere, China is rolling up the sleeves to counter multiple sanctions over the Hong Kong security bill.

On the other hand, expectations of further stimulus from Europe and the US join the upbeat news concerning the virus vaccine to favor the risks. The European Summit is on for the fourth day in a raw with the latest news suggesting a deal over 750 billion Euros of the aid package, with 390 billion Euros in grants. Alternatively, the US Senators will also juggle over the forthcoming stimulus for which Democrats put a bid of $3 trillion whereas the ruling Republicans hesitate to spend with a $1.0 trillion likely budget. It should also be noted that New Zealand’s (NZ) Finance Minister Grant Robertson cited the availability of funds to combat the second wave of virus, if any, which in turn marked preparedness of the policymakers and adds gains to the NZD/USD pair.

Amid all these plays, Wall Street managed to offer a positive start to the week but the US 10-year Treasury yields dropped 1.5 basis points to 0.617% by the end of Monday.

Looking forward, minutes of the latest RBA meeting and comments from the RBA Governor Philip Lowe will be the immediate catalyst for the pair. Traders will look for any sign of further easing for the further upside. At home, June month’s Credit Card Spending is expected to decline further from -24.7% versus -21.1% prior.

Technical analysis

The monthly high around 0.6600 becomes the immediate upside barrier ahead of the mid-January top near 0.6665. Meanwhile, the bears are less likely to enter unless witnessing a clear downside break below a two-month-old ascending trend line, at 0.6555 now.