• The risk-off impulse prompted fresh selling around NZD/USD on Tuesday.
  • New COVID-19 variant fears continue weighing on investors’ sentiment.
  • Declining US bond yields undermined the USD and helped limit the slide.

The NZD/USD pair dropped to the lowest level since November 2020 during the early European session, albeit recovered a few pips thereafter and was last seen trading around the 0.6800 mark.

Following the previous day's modest bounce, the NZD/USD pair came under fresh selling pressure on Tuesday and prolonged its one-month-old bearish trajectory. Concerns about the potential economic fallout from the spread of a new vaccine-resistant variant of the coronavirus – Omicron – continue weighing on investors' sentiment. This was evident from a fresh leg down in the global equity markets, which, in turn, was seen as a key factor that drove flows away from the perceived riskier kiwi.

Bulls seemed rather unimpressed and failed to gain any respite from the heavily offered tone around the US dollar, weighed down by declining US Treasury bond yields. The latest developments surrounding the coronavirus saga might have dashed market expectations for an early policy tightening by the Fed. This, along with the global flight to safety, dragged the yield on the benchmark 10-year US government bond to a near three-week low, back closer to the 1.45% threshold and undermined the greenback.

That said, extremely oversold conditions on short-term charts helped limit any deeper losses, rather assisted the NZD/USD pair to quickly recover around 20-25 pips from the 0.6780 region. Market participants now look forward to the US economic docket, highlighting the release of the Conference Board's Consumer Confidence Index later during the early North American session. The key focus, however, will be on Fed Chair Jerome Powell's testimony before the Senate Banking Committee.

Powell's remarks will influence market expectations about the Fed's next policy move and drive the USD demand. Apart from this, 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

NZD/USD

Overview
Today last price 0.6797
Today Daily Change -0.0012
Today Daily Change % -0.18
Today daily open 0.6809
 
Trends
Daily SMA20 0.7012
Daily SMA50 0.703
Daily SMA100 0.702
Daily SMA200 0.7081
 
Levels
Previous Daily High 0.684
Previous Daily Low 0.6787
Previous Weekly High 0.7014
Previous Weekly Low 0.6804
Previous Monthly High 0.7219
Previous Monthly Low 0.6876
Daily Fibonacci 38.2% 0.6807
Daily Fibonacci 61.8% 0.682
Daily Pivot Point S1 0.6784
Daily Pivot Point S2 0.6759
Daily Pivot Point S3 0.6731
Daily Pivot Point R1 0.6837
Daily Pivot Point R2 0.6865
Daily Pivot Point R3 0.689

 

 

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