- NZD/USD gained some traction amid the emergence of some fresh USD selling.
- The upbeat market mood weighed on the safe-haven USD and benefitted the kiwi.
- Concerns about worsening US-China relations might keep a lid on any strong gains.
- A sustained move beyond 0.6200 mark needed to confirm a near-term bullish bias.
The NZD/USD pair lacked any firm directional bias and traded in a narrow trading band, just below the 0.6200 mark through the early European session.
The pair stalled the overnight pullback from 2-1/2 month tops near mid-0.6100s and managed to regain some positive traction on Thursday. The uptick was supported by the upbeat market mood and some renewed US dollar selling pressure.
The global risk sentiment remained well supported by the optimism over a potential COVID-19 and hopes of a sharp V-shaped recovery for the global economy. This, in turn, dented the greenback's relative safe-haven status and benefitted perceived riskier currencies, like the kiwi.
Meanwhile, investors remain concerned about a further escalation in diplomatic tensions between the United States and China, which should hold back bullish traders from placing fresh bets and keep a lid on any strong gains for the NZD/USD pair.
Even from a technical perspective, the pair has been struggling to find acceptance/build on its momentum beyond 100-day SMA near the 0.6200 mark. Hence it will be prudent to wait for some strong follow-through buying before positioning for an extension of the recent appreciating move.
Moving ahead, market participants now look forward to a slew of important US macro data for some fresh impetus later during the early North American session. Thursday's US economic docket highlights the release of the second estimate of Q1 GDP, Durable Goods Orders for April, Initial Weekly Jobless Claims and Pending Home Sales.
Technical levels to watch