After yesterday's sharp reversal from 3-week high, bears took a breather on Thursday and the NZD/USD pair staged a tepid recovery back towards 0.7100 mark.
The pair on Wednesday came under intense selling pressure after upbeat ADP report on US private sector employment further boosted investors' confidence over faster US economic growth in 2017. Adding to this, OPEC deal-led sharp upsurge in crude oil prices bolstered inflation expectations and fueled speculations of higher interest-rates in the US, which was seen weighing heavily on higher-yielding currencies - like the Kiwi.
The pair gained some respite during Asian session on Thursday, as investors turned in 'wait and watch' mode ahead of Friday's key monthly employment details from the US (NFP). In the meantime, today's release of the US ISM manufacturing PMI would be looked upon for short-term trading opportunities later during NA session.
Technical levels to watch
Momentum above 0.7100 handle is likely to confront resistance near 0.7125 level, which if cleared decisively is likely to boost the pair towards 0.7170 (yesterday's high) before aiming towards 100-day SMA resistance near 0.7195-0.7200 region. On the downside, sustained weakness below 0.7070 immediate support would exert further selling pressure and drag the pair back towards the very important 200-day SMA support near 0.7045 region. A convincing break below 200-day SMA would now negate possibilities of any further recovery and open room for resumption of the pair's near-term downward trajectory.
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