NZD/USD off lows, still weaker around mid-0.7200s


The NZD/USD pair traded with mild bearish bias through Asian session on Monday, albeit has managed to hold its neck above the 0.7200 handle. 

On Friday, the pair failed to conquer 0.7335-40 supply zone and retreated over 75-pips from highs. Extending previous session's sharp pull-back from near one-month highs, the pair started the week on back-foot and was being weighed down by a goodish US Dollar recovery, amid easing geopolitical tensions in the Korean peninsula. 

This coupled with a modest pickup in the US Treasury bond yields remained supportive of the greenback's recovery and was also seen denting demand for higher-yielding currencies - like the Kiwi. 

Also collaborating to the pair's weaker sentiment was the downward revision of the inflation forecasts for 2017/18 by the New Zealand Institute of Economic Research (NZIER). 

   •  New Zealand - NZIER lowers inflation forecasts

With an empty US economic docket, the pair remains at the mercy of US bond yield dynamics and broader market sentiment surrounding the greenback.

Technical levels to watch

Weakness below 0.7225 level could get extended towards 100-day SMA support near the 0.7200-0.7195 area, below which the pair is likely to challenge the very important 200-day SMA support near the 0.7135 region.

On the flip side, a sustained move back beyond 0.7260 level could lift the pair back above the 0.7300 handle but the key barrier would remain near 50-day SMA, around the 0.7335-40 region.

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