NZD/USD bounces off three-week lows, retains bearish bias near 0.7215 level
|The RBNZ-led selling pressure around the Kiwi seems to have abated, with the NZD/USD pair bouncing off from sub-0.7200 level.
Currently trading around 0.7215 region, a mild greenback retracement, with the key US Dollar Index reversing majority of its early gains, has been the key factor supporting the pair's recovery. Possibilities of shorts taking some profits off the table, following the pair's reversal of nearly 200-pips in just three trading sessions, could have also collaborted to the recovery move.
It, however, remains to be seen if the pull-back is backed by genuine buying or is just a technical bounce against the backdrop of dovish RBNZ monetary policy statement, released earlier on Thursday.
Meanwhile, a fresh wave of up-move in the US Treasury bond yields, especially the longer-term (5, 10, 30 years), should come to the rescue for the US Dollar bulls and restrict any swift recovery.
On economic data front, the release of weekly jobless claims data might provide some short-term trading opportunities during early NA session.
Technical outlook
Omkar Godbole, Analyst and Editor at FXStreet notes, "pair’s repeated failure to extend gains above the confluence of trend line resistance around 0.73 last week, followed by a drop below a critical support level of 0.7250 today suggests the rally from the December 23 low of 0.6862 has topped out and the pair is likely to test 50-DMA support at 0.7142 over the next few days. The 38.2% fib retracement of the rally from the Dec 23 low seen at 0.7179 may offer interim support, although the subsequent upticks could be met with fresh offers as long as the spot stays below 10-DMA. Only a daily close above 0.7320 would signal bearish invalidation."
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