NZD/USD consolidates near 32-month tops, eyeing 0.7200 mark

• NZD/USD gained strong positive traction on Wednesday and jumped to fresh multi-year tops.
• The risk-on mood undermined the safe-haven USD and benefitted the perceived riskier kiwi.
• Relatively thin liquidity conditions seemed to be the only factor capping gains for the major.

The NZD/USD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a range around the 0.7180-85 region, just below 32-month tops set earlier this Wednesday.

The pair built on the previous day's positive move and continued scaling higher through the early part of the trading action on Wednesday. The prevalent upbeat market mood continued weighing on the safe-haven US dollar, which, in turn, benefitted the perceived riskier kiwi.

Investors remained optimistic about the likelihood of additional financial aid and a strong global economic recovery in 2021. The global risk sentiment got an additional boost after UK regulators approved the use of the AstraZeneca/Oxford coronavirus vaccine.

A broad-based USD weakness pushed the NZD/USD pair further beyond the recent swing highs, around 0.7165-70 region, and has set the stage for additional gains. That said, thin trading volumes on the back of year-end holidays held investors from placing fresh bullish bets.

Market participants now look forward to the US economic docket, featuring the second-tier releases of Goods Trade Balance, Chicago PMI and Pending Home Sales. The data, along with the broader market risk sentiment, might influence the USD and provide some impetus to the NZD/USD pair.

Technical levels to watch