NZD/USD consolidates in a range above 0.6800 mark

• NZD/USD managed to defend the 0.6800 mark and stage a modest recovery on Monday.
• The risk-on impulse turned out to be a key factor that benefitted the perceived riskier kiwi.
• Rebounding US bond yields helped revive the USD demand and capped gains for the major.

The NZD/USD pair extended its sideways consolidative price move and remained confined in a range, around the 0.6825 region through the early European session.

Having defended the 0.6800 round-figure mark, the NZD/USD pair staged a modest recovery from the lowest level since November 2020, though lacked any strong follow-through. As investors assess the economic impact of the new vaccine-resistant Omicron coronavirus variant, the risk-on impulse in the markets extended some support to perceived riskier currencies, including the kiwi.

That said, a goodish pickup in the US dollar demand kept a lid on any meaningful upside for the NZD/USD pair, at least for now. Receding demand for safe-haven assets led to a strong rebound in the US Treasury bond yields and underpinned the greenback. That said, the repricing of the likely timing of the Fed's rate hike move might hold back the USD bulls from placing aggressive bets.

The latest development surrounding the coronavirus saga might have forced investors to scale back their bets for an early policy tightening by the Fed. This could act as a headwind for the greenback and lend some support to the NZD/USD pair. That said, the pair's inability to register any meaningful recovery suggests that the recent bearish trajectory might still be far from over.

The US economic docket features the only release of Pending Home Sales data, which might do little to provide any impetus. This makes it prudent to wait for a strong follow-through buying before confirming a near-term bottom for the NZD/USD pair. On the other hand, bearish traders might wait for a sustained break below the 0.6800 round-figure mark before positioning for further losses.

Technical levels to watch