• USD struggles to build on modest recovery move.
• Retracing US bond yields lending additional support.
• Follow-through buying needed to confirm bullish bias.
The NZD/USD pair reversed an early Asian session dip to 0.7075 level and might now be attempting a fresh move beyond the very important 200-day SMA.
Currently placed just a few pips above the 0.7100 handle, the pair's latest leg of up-move was supported by a modest US Dollar retracement. In fact, the USD was seen struggling to build on its modest recovery move from 3-1/2 month lows, which coupled with retracing US Treasury bond yields provided a minor boost to higher-yielding currencies - like the Kiwi.
However, the prevailing weaker tone around commodity space did little to lend any additional support. Moreover, the pair has repeatedly failed to sustain its up-move beyond the 0.7100 handle over the past two trading session and hence, traders are likely to wait for a strong follow-through buying interest before positioning for any further near-term up-move.
On the economic data front, the US ISM manufacturing PMI might provide some short-term trading impetus later during the early NA session. The key focus, however, would be on the December FOMC meeting, which along with Friday's NFP report would help determine the pair's next leg of directional move.
Technical levels to watch
Immediate resistance is pegged near the 0.7125-30 region, above which the pair is likely to aim towards 0.7170-75 supply zone en-route the 0.7200 handle. On the flip side, the 0.7075 region, nearing 100-day SMA, might continue to act as an immediate support, which if broken is likely to accelerate the fall back towards 0.7025-20 horizontal support ahead of the key 0.70 psychological mark.
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