After initially wobbling near 10-month lows, the NZD/USD pair staged a goodish recovery and spiked to 0.6900 neighborhood.
With today’s recovery, the pair snapped five consecutive days of losing streak and has now reversed majority of it’s looses recorded in the previous two-trading session.
In absence of any fresh fundamental trigger, the pair’s recovery from mid-0.6800s could be attributed to repositioning trade in anticipation of yet another disappointment from today’s US economic releases. It, however, remains to be seen if the up-move is backed by any genuine buying or is being solely led by a bout of short-covering bounce.
Against the backdrop of prevalent positive tone surrounding the US treasury bond yields, which tends to weigh on higher-yielding currencies – like the Kiwi, the current leg of recovery move still runs through the risk of confronting fresh supply at higher levels.
Today’s US economic docket features the release of Core PCE Price Index, Personal Income/Spending data and would be followed by the release of ISM Manufacturing PMI.
Technical levels to watch
On a sustained recovery beyond the 0.6900 handle, the momentum could get extended towards 0.6930 horizontal resistance before a fresh bout of short-covering lift the pair back towards the key 0.70 psychological mark.
Meanwhile on the downside, weakness back below 0.6870-60 horizontal zone is likely to accelerate the slide even below the 0.6800 handle ahead of 0.6775 horizontal support.