NZD/USD takes a sharp U-turn, plunges below 0.7200 handle

Having touched a fresh five-week high, the NZD/USD pair witnessed a sharp reversal and is now extending its slide further below 0.7200 handle.

Currently trading around 0.7165 region, testing session low, the pair once again failed to sustain its strength above 0.7200 handle and ran through fresh offers amid resurgent greenback buying interest. In fact the key US Dollar Index has now recovered early lost ground and moved back above 101.00 mark. 

Meanwhile, a sharp spike in the US treasury bond yields also seems to be driving flows away from higher-yielding currencies - like the Kiwi, and collaborating to the ongoing slide from the highest level since mid-December. 

Moreover, possibilities of some long unwinding ahead of Donald Trump’s inauguration, later during the day, further aggravated the profit-taking slide. Investors on Friday will remain focused on Trump’s inaugural speech for clarity over his promised fiscal stimulus policies, which would a key determinant of the pair's near-term trajectory.

Technical levels to watch

Immediate downside support is pegged at 100-day SMA near 0.7150 region, which if broken is likely to accelerate the slide to 0.7120 intermediate support before the pair eventually drops to the very important 200-day SMA support near 0.7100-0.7090 region.

On the upside, 0.7190-0.7200 area now becomes immediate resistance, which if cleared now seems to pave way for continuation of the pair's near-term upward trajectory towards December highs resistance near 0.7235-40 region, en-route 0.7300 round figure mark.