NZD/USD clings to gains near multi-day tops, still below 0.6100 mark

The NZD/USD pair built on the previous day's strong positive move of around 120 pips and continued gaining traction for the second straight session on Tuesday. The uptick lifted the pair to near one-week tops, though started losing the momentum just ahead of the 0.6100 mark.

The US drugmaker Moderna announced positive results for its potential COVID-19 vaccine on Monday and added to the optimism over the easing of lockdown restrictions in some parts of the world. This, in turn, boosted investors' confidence and led to a strong rally in the global equity markets.

The upbeat market mood weighed on the US dollar's perceived safe-haven status and turned out to be one of the key factors that benefitted perceived riskier currencies, including the kiwi. The momentum lifted the NZD/USD pair back above the key 0.60 psychological mark, which further contributed to some follow-through short-covering move on Tuesday.

Meanwhile, growing fears about the second wave of coronavirus pandemic and worsening US-China relations helped limit the recent USD pullback from three-week tops. This eventually seemed to have kept a lid on any runaway rally for the NZD/USD pair, making it prudent to wait for some follow-through buying before placing fresh bullish bets.

Later during the early North American session, the US housing market data – Building Permits and Housing Starts – will be looked upon for a fresh impetus. This will be followed by the Fed Chair Jerome Powell and the US Treasury Secretary Steven Mnuchin's congressional testimony, which might produce some meaningful trading opportunities.

Technical levels to watch