NZD/USD turns lower for third straight session

The NZD/USD pair failed to build on early tepid recovery move and turned lower for the third consecutive session.

The pair failed to extend overnight recovery led by GDT Prince Index that showed dairy product prices moderated for the second time at a fortnightly auction on Wednesday, albeit at a slower pace. 

   •  Kiwi looks to world milk prices – ANZ

The positive effect to some extent got negated by today’s disappointing Chinese Caixin services PMI print for June and the pair failed to recover back above the 0.7300 handle. 

With the US Treasury bond yields erasing early losses, a modest pick up in the US Dollar demand further collaborated towards driving flows away from higher-yielding currencies – like the Kiwi. 

Currently trading around 0.7270-75 region, the pair is hovering closer to one-week lows touched in the previous session. Hence, a follow through weakness, amid repositioning trade ahead of today’s FOMC meeting minutes, now seems a distinct possibility.

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Ahead of the key event risk, the release of factory orders data from the US might provide some short-term trading opportunities. 

Technical levels to watch

Immediate support is seen near mid-0.7200s, below which the pair is likely to accelerate the fall towards 0.7215 horizontal support before eventually break below the 0.7200 handle towards testing its next support near 0.7185 level.

On the upside, any up-move might continue to face some fresh supply near the 0.7300 handle, which if cleared has the potential to lift the pair back towards multi-month highs resistance near 0.7345 level en-route 0.7375 level (yearly tops).

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