NZD/USD refreshes session tops, beyond mid-0.7100s amid renewed USD selling

• NZD/USD attracted some dip-buying on Monday amid some renewed USD selling bias.
• Reduced Fed rate hike bets, sliding US bond yields continued undermining the greenback.
• Worries about surging COVID-19 cases might keep a lid on any further gains for the pair.

The NZD/USD pair built on its steady intraday recovery from three-day lows and refreshed daily tops, around the 0.7160 region during the early European session.

The pair opened with a modest bearish gap on the first day of a new trading week, albeit lacked any follow-through selling, instead attracted some dip-buying near the 0.7125-20 region. Renewed fears about another dangerous wave of coronavirus infections globally weighed on investors' sentiment and turned out to be a key factor that weighed on the perceived riskier kiwi.

However, diminishing odds for an earlier Fed lift-off kept the US dollar bulls on the defensive and extended some support to the NZD/USD pair. Despite the incoming strong US economic data, investors seem convinced that the Fed will keep rates near zero levels for a longer period. The greenback was further pressured by the recent decline in the US Treasury bond yields.

It is worth reporting that the yield on the benchmark 10-year US government bond retreated further from a more than one-year peak of 1.7760% touched in March and sank to 1.5280% last week. This, in turn, was seen as another factor that might continue to undermine the greenback and supports prospects for a further near-term appreciating move for the NZD/USD pair.

There isn't any major market-moving economic data due for release from the US. Hence, the US bond yields might continue to play a key role in influencing the USD price dynamics. Apart from this, the broader market risk sentiment should further allow traders to grab some short-term opportunities around the NZD/USD pair, though COVID-19 jitters might cap gains.

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