NZD/USD fades upbeat NZ CPI-led spike beyond 0.7300 handle

The NZD/USD pair faded upbeat NZ CPI-led bullish spike to 2-1/2 month peak, beyond 0.7300 handle, amid modest greenback recovery move.

A protectionist stance by President Donald Trump continued weighing on the greenback, with the key US Dollar Index dropping to 7-week lows during early Asian session. This coupled with higher-than-expected NZ CPI print for the fourth quarter of 2016 lifted the major to its highest level since early November.

The pair, however, reversed early gains and turned lower as traders seemed inclined to take some profits off the table in wake of a minor greenback recovery. Moreover, continuous rise in the US treasury bond yields also tend to drive flows away from higher-yielding currencies – like the Kiwi, albeit seems to be negated by upbeat sentiment surrounding commodity space, at least for the time being. 

Traders on Thursday now look forward to the US economic calendar, featuring the release of – weekly jobless claims, goods trade balance, flash services PMI, new home sales and CB’s leading indicator, for short-term momentum play. 

Technical levels to watch

A follow through selling pressure is likely to extend the retracement back towards 0.7235 support, en-route 0.7215-10 support area. A clear break below 0.7215-10 support might turn the pair vulnerable to correct further towards 0.7160 horizontal support.

On the upside, 0.7300 handle now becomes immediate resistance above which the pair is likely to head towards 0.7340-45 intermediate resistance, en-route 0.7390-0.7400 strong hurdle.