NZD/USD eases from multi-day tops, still well bid around 0.6970-75 region

The NZD/USD pair maintained its bid tone through the early European session, albeit has retreated few pips from daily tops and was last seen trading around the 0.6970 region.

Following the previous day's modest slide, the NZD/USD pair managed to regain some positive traction on the last day of the week and touched a four-day high level of 0.6989. The risk-on impulse – as depicted by a generally positive tone around the equity markets – was seen as a key factor that extended some support to the perceived riskier kiwi.

Meanwhile, worries about the economic fallout from the spread of the highly contagious Delta variant of the coronavirus acted as a tailwind for the safe-haven US dollar. Apart from this, a goodish pickup in the US Treasury bond yields further underpinned the greenback. This, in turn, kept a lid on any meaningful upside for the NZD/USD pair, at least for now.

Hence, it will be prudent to wait for some strong follow-through buying before positioning for an extension of this week's recovery move from the 0.6880 region, or the lowest level since November 2020. Market participants now look forward to the US economic docket, featuring the release of the flash PMI prints for some meaningful trading impetus.

This, along with the US bond yields, will influence the USD price dynamics. 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