After staging a meaningful recovery on Tuesday, the NZD/USD pair on Wednesday turned sharply lower and dropped to 0.7000 region before retracing a bit to currently trade around 0.7030-35 band.
Buoyant sentiment surrounding the US Dollar, after Tuesday's yet another set of upbeat economic releases, has been the key factor that led to the pair's retracement from higher level on Tuesday and driving it lower on Wednesday.
On Tuesday, the pair rose despite of weak trade balance data and was benefitted by a broadly weaker US Dollar, especially against the Japanese Yen.
Meanwhile, market will remain focused on today's crucial FOMC decision, which although is not expected to make a move this time but could provide hints over the timing of next Fed rate-hike action and hence, would enable investors to determine the near-term direction for the pair. Traders will also confront the release of US durable goods orders and pending home sales data, later during NA trading session.
From technical perspective, the pair is finding it difficult to build on to its recovery momentum above 50-day SMA region. A sustained weakness back below 50-day SMA might now trigger a fresh leg of weakness for the pair.
Technical levels to watch
A decisive break below 0.7000 psychological mark support now seems to drag the pair below recent swing lows support near 0.6955-50 level, towards testing 100-day SMA support near 0.6925 region. On the flip side, momentum above 0.7070-75 session high resistance should assist the pair to extend its recovery trend immediately towards 0.7110-15 horizontal resistance before heading towards 0.7150 strong hurdle.
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