NZD/USD consolidates gains near weekly tops, just above 0.6100 mark

The NZD/USD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a narrow trading band just above the 0.6100 mark, or weekly tops.

The pair gained traction for the second straight session on Friday and built on the previous day's goodish intraday bounce of nearly 100 pips from weekly lows – levels just below the key 0.60 psychological mark. The momentum assisted the pair to climb further beyond the 0.6100 round-figure mark and was being supported by a combination of factors – further improvement in the global risk sentiment and the prevalent US dollar selling bias.

The latest optimism over the re-opening of economies in some parts of the world remained supportive of the upbeat market mood, which got an additional boost from reports overnight that US-China trade negotiators had held a phone call. Both the parties agreed to strengthen economic and public health cooperation and boosted investors' confidence. This, in turn, acted as one of the key factors that benefitted perceived riskier currencies, including the kiwi.

On the other hand, the US dollar remained depressed on the back for speculations that the Fed might push rates below zero. Investors argued that the Fed will be forced to become more experimental to deal with worse-than- anticipated economic downturn caused by coronavirus-induced lockdowns.

However, a modest pickup in the US Treasury bond yields helped limit any further USD downside and kept a lid on any further gains for the major. Investors also seemed reluctant to place aggressive bets, rather preferred to wait on the sidelines ahead of Friday's release of the closely watched US monthly jobs report – popularly known as NFP.

Technical levels to watch