NZD/USD bulls stepping in at daily support as full markets return

• NZD/USD bears are being beaten back by bulls near the daily support. 
• A pick up in price activity is underway as traders return to markets for Tuesday. 

At 0.6804, NZD/USD is higher on Tuesday by 0.17% following a rally from a low of 0.6783 to a high of 0.6808. It is a relief for traders following a very quiet end to Monday's trade with the US on holiday for Martin Luther King Jr Day and no headline data releases in Europe.

''With 2022 well underway, the main sense we get is that it could be a bumpy ride as global central banks transition from easing to tightening, and as markets look for slower growth (or a decline in) liquidity as QT supplants QE,'' analysts at ANZ Bank said. 

 ''Locally, Omicron remains a proximate threat (to activity and inflation), but going the other way, it’s not difficult to envisage inflation and jobs data surprising to the upside over coming quarters, and that could provide a leg of support. Plenty to think about.''

Meanwhile,  traders continue to hold on to US dollars as per the latest positing data but there is a major segment of the market that expect that the Federal Reserve tightening plans are largely priced in. This is weighing on the greenback, while the euro eased from Friday’s two-month high. The US dollar index (DXY), which declined sharply last week until Friday's leap, is dripping pips by some 11% ton the day so far.

NZD/USD technical analysis

The bulls are moving in around daily support following a test at the neckline support of the W-formation. If this were to hold, the bulls will be looking to run the show back towards 0.6900. A break of support below 0.6780 will otherwise open prospects of a test to the daily lows near 0.6735.