NZD/USD bears remain in full control, now eyeing multi-month lows

Haresh Menghani FXStreet

• Weighed down by surging US bond yields.
• US tax bill headlines to remain in focus.

The NZD/USD pair remained heavily offered through the early NA session and has now moved within striking distance of multi-month lows touched in late October.

A sharp rebound in the US Treasury bond yields, supported by Wednesday's US economic data that showed an uptick in the underlying inflation, helped the US Dollar to stage a solid rebound and was eventually seen weighing heavily on higher-yielding currencies - like the Kiwi.

• USD: Impressive data pulse - Westpac

The greenback got an additional boost from a report, via Politico, that House Republicans are confident of having sufficient support to pass a massive overhaul of the US tax code. Investors, however, are likely to remain cautious ahead of a key vote on the long-awaited US tax legislation, due later today.

• US: Tax reform is raising expectations – Goldman Sachs

In the meantime, the US economic docket would be looked upon for some short-term trading impetus but is likely to be overshadowed by some repositioning trade ahead of the key event risk.

Technical levels to watch

A follow-through selling pressure below 0.6830 level is likely to accelerate the fall towards the 0.6800 handle before the pair eventually drops to its next major support near the 0.6775-70 region.

On the upside, recovery attempts back above 0.6850 level might now confront fresh supply near the 0.6875-80 region and is closely followed by a strong hurdle near the 0.6900 handle.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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