NZD/USD consolidates near 0.6800 mark, highest since March 2019

• NZD/USD added to last week’s strong gains and continued scaling higher on Monday.
• Joe Biden’s victory in the US presidential election kept the USD bulls on the defensive.
• The upbeat market mood provided an additional boost to the perceived riskier kiwi.

The NZD/USD pair now seems to have entered a bullish consolidation phase and was seen oscillating in a range near 19-month tops, around the 0.6800 mark.

A combination of supporting factors assisted the pair to build on last week's strong positive move and gain some follow-through traction on the first day of a new trading week. The Democratic candidate Joe Biden's victory in a nail-biting US Presidential election eliminated some of the uncertainties. This, in turn, boosted investors' confidence and triggered a fresh wave of the risk-on trade. This was evident from the prevalent bullish sentiment around the equity markets, which, in turn, benefitted the perceived riskier kiwi.

Meanwhile, the possibility of a split Congress dampened prospects for big fiscal stimulus packages. This, in turn, fueled speculations that the Fed might be forced to ease further to support the economy amid the near-term risk of rising COVID-19 infection. Dovish Fed expectations exerted some additional downward pressure on the already weaker US dollar, which provided an additional boost to the NZD/USD pair. However, slightly overbought conditions on hourly charts kept a lid on any further gains for the major, at least for now.

Investors might also refrain from placing any aggressive bets ahead of the latest monetary policy update by the Reserve Bank of New Zealand ((RBNZ) on Wednesday. The RBNZ is widely expected to maintain status-quo and its benchmark interest rate unchanged. The central bank, however, is expected to lay the groundwork to introduce negative rates in 2021. Hence, the key focus will be on the policy outlook, which will influence the NZD/USD pair and assist investors to determine the next leg of a directional move.

In the meantime, the broader market risk sentiment and the USD price dynamics will continue to play a key role in driving the NZD/USD pair amid absent relevant market moving economic releases from the US.

Technical levels to watch