With tensions between the US and China showing no signs of abating, and a looming India as its neighbour, the new Nepali government has to balance its relations with all countries, each with their own competing interests.
Prime Minister Dahal is seen as a pro-China politician in Washington and Delhi.
In the last two months, the US under secretary of state for political affairs Victoria Nuland and the United States Agency for International Development administrator Samantha Power visited Nepal to step up Washington's influence there.
They announced new investments, including more than a billion dollars in clean energy and a grant of $60 million to strengthen the civil society in Nepal.
In Nepal, Beijing had increased its foreign direct investments by US $115 million last year.
The involvement of India makes the complex geopolitical situation even more challenging.