NZD/USD retreats from 4-week tops, still well bid around 0.6540-45 region

• NZD/USD continued gaining traction for the fifth consecutive session on Monday.
• The risk-on mood undermined the safe-haven greenback and remained supportive.
• Concerns about risking COVID-19 cases kept a lid on any strong gains for the major.

The NZD/USD pair jumped to four-week tops, around the 0.6565 region during the early European session, albeit quickly retreated few pips thereafter.

The pair built on last week's strong gains and continued scaling higher for the fifth consecutive session on Monday. The positive momentum was sponsored by a combination of factors, including the risk-on mood and sustained selling around the US dollar.

The incoming positive economic data offered further evidence that the worse of the coronavirus pandemic was probably over and revived hopes of a sharp V-shaped economic recovery. This, in turn, remained supportive of the prevalent upbeat market mood.

The continuous improvement in the global risk sentiment undermined demand for the safe-haven US dollar and benefitted perceived riskier currencies, like the kiwi. Even a strong pickup in the US Treasury bond yields did little to provide any respite to the USD bulls.

However, growing worries that a surge in COVID-19 cases could trigger renewed lockdown measures and delay economic recovery. This, in turn, held investors from taking excessive risk and capped the upside for the NZD/USD pair, rather prompted some profit-taking at higher levels.

Market participants now look forward to the US economic docket, highlighting the release of ISM Non-Manufacturing PMI. The data might influence the USD price dynamics and produce some meaningful trading opportunities later during the early North American session.

Technical levels to watch