NZD/USD surge past 0.7100 handle ahead of US data
|The NZD/USD pair maintained its strong bid tone and has now moved back above 0.7100 level, erasing all of its losses posted on Monday in the aftermath of the historic Brexit referendum.
A broadly weaker US Dollar is seen helping riskier assets – like commodities, to rebound and boosting demand for commodity-linked currencies - like the New-Zealand Dollar.
The pair got an additional boost after a revised labor market report (with a changed method of calculation) showed New-Zealand's unemployment rate has fallen to 5.2% in the first quarter of 2016 as compared to the presented 5.7% in the original report.
On Tuesday, the pair had trimmed its gains, confirming a strong resistance around 0.7090-0.7100 zone, following the release of strong US GDP print for Q1 2016 and better-than-expected Consumer Confidence Index.
Focus now shifts back to US economic data that includes - the Federal Reserve's preferred gauge of inflation, core PCE price index, along with personal spending and pending home sales data, which would now drive further momentum for the broader US Dollar and eventually determine direction for the NZD/USD pair.
Technical levels to watch
From current levels, sustained momentum above 0.7125-30 resistance has the potential to continue fueling bullish momentum, boosting the pair further beyond 0.7200 round figure mark resistance, towards testing its recent closing highs resistance around 0.7250 area.
Alternatively, reversal from current resistance level, leading to a break below 0.7100 handle, now seems to find support at session low, around 0.7050-40 area. A follow through selling pressure is likely to force the pair to break through Brexit led swing lows support near 0.7000 psychological mark and head towards testing 50-day SMA support around 0.6900 region.
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