After an initial dip to 0.6990 region, the NZD/USD pair seems to have regained traction and has now moved into positive territory for the fourth consecutive session.
Earlier during Asian session on Wednesday, the pair extended overnight retracement from one-month highs and dipped below the key 0.70 psychological mark in wake of broad based US Dollar recovery amid increasing odds for an eventual June Fed rate-hike action. The pair was also being weighed down by Moody's downgrade of China's sovereign credit rating on concerns over the country's soaring debt, which negated today's upbeat release of trade balance data from NZ.
Despite of the pull-back, the pair has failed to move past session highs and lacked any follow through momentum amid a bullish consolidative price-action surrounding the greenback as investors focus shifts to the minutes of the Federal Reserve’s latest meeting, due later during the day.
Today's Fed minutes would be keenly scrutinized for clues over the timing of next Fed rate-hike action, which would eventually influence demand and determine the next leg of directional move for higher-yielding currencies - like the Kiwi. Apart from the Fed minutes, the release of existing home sales data would also be looked upon for some short-term trading impetus.
• FOMC Minutes to push yields slowly higher again - SocGen
Technical levels to watch
Momentum above session 0.7020 level (session tops) could get extended towards back towards 0.7040-45 resistance area, which is closely followed by 100-day SMA hurdle near 0.7055 region. On a convincing break through 100-day SMA barrier, the pair is likely to aim towards testing the very important 200-day SMA, beyond the 0.7100 handle.
On the downside, 0.6990-85 area now seems to have emerged as immediate support, below which the pair is likely to extend the corrective slide towards 0.6955-50 support en-route a strong horizontal support near 0.6935 region.
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