NZD/USD flirts with two-day lows, holds above mid-0.7200s

The NZD/USD pair remained depressed through the early European session and was last seen trading near the lower end of its intraday trading range, around mid-0.7200s.

The pair edged lower for the second consecutive session on Tuesday and extended the previous day's modest pullback from levels just above the 0.7300 mark, or the highest since February 26. A combination of factors assisted the US dollar to move further away from two-and-half-month lows, which, in turn, exerted some pressure on the NZD/USD pair.

As investors looked past Friday's disappointing US monthly jobs report, the USD found some support from a modest uptick in the US Treasury bond yields. Apart from this, a sharp fall in the global equity markets forced investors to take refuge in the safe-haven greenback and further contributed to driving flows away from the perceived riskier kiwi.

The global risk sentiment took a hit amid speculations that rising inflation might force the Fed to tighten its monetary policy sooner rather than later. That said, the recent upsurge in commodity prices might continue to act as a tailwind for the New Zealand dollar and help limit any deeper losses for the NZD/USD pair, at least for the time being.

This makes it t prudent to wait for some strong follow-through selling before confirming that the NZD/USD pair has topped out in the near term and positioning for any meaningful corrective slide.

Meanwhile, there isn't any major market-moving economic data due for release from the US on Tuesday. Hence, the US bond yields will continue to play a key role in influencing the USD price dynamics. Apart from this, traders might further take cues from the broader market risk sentiment to grab some short-term opportunities around the NZD/USD pair.

Technical levels to watch