NZD/USD rejected at 50-DMA, trims upbeat NZ CPI-led gains to near 3-week highs

Haresh Menghani FXStreet

The NZD/USD pair once again faced rejection near 50-day SMA hurdle and is now headed towards the lower end of daily trading range.

Currently trading around 0.7020 level, spot ran through fresh offers near mid-0.7000s and reversed majority of upbeat NZ CPI-led gains to fresh three-week tops. A goodish recovery move in the US treasury bond yields seems to be only factor driving flows away from higher-yielding currencies - like the Kiwi, which otherwise has failed to lend any immediate support to the greenback, with the key US Dollar Index struggling near monthly lows.

• NZD/USD upside to 0.7090 losses momentum – UOB

Market seems to have digested today's NZ Consumer Price Index (CPI) report that showed prices rose at their fastest annual pace in five- and-a-half years during the first quarter of 2017, with the US bond yields dynamics turning out to be an exclusive driver of the pair's movement during European session.

Next on tap would be the US economic docket that includes - weekly jobless claims and Philly Fed manufacturing index, which would help market participants grab short-term trading opportunities. Later during the NY session, the US Treasury Secretary Steven Mnuchin's speech would be closely scrutinized for comments on the US currency.

• US: Jobless claims and Philly Fed manufacturing in focus – TDS

Technical levels to watch

On a sustained break below the key 0.70 psychological mark, the pair is likely to accelerate the slide towards 0.6960-55 horizontal support before heading towards its next important support near 0.6910-0.6900 region.

Meanwhile on the upside, 0.7040-50 area (50-day SMA) remains immediate strong resistance, which if conquered could lift the pair towards 100-day SMA hurdle near 0.7080 region. A follow through buying interest should pave way for continuation of the pair's near-term upward trajectory beyond the 0.7100 handle towards testing the very important 200-day SMA near 0.7135-40 region.

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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