NZD/USD reclaims 0.7000 handle, seems to extend the bounce-back

Following a break below 0.7000 handle on Tuesday and subsequently weakening to 0.6963 during early Asian session on Wednesday, the NZD/USD pair found fresh buying interest at lower levels that assisted the pair to move back above 0.7000 psychological mark.

After last week's RBNZ's decision to stand pat, the pair has been declining steadily alongside a descending trend-channel formation on hourly chart. Following a test of the trend-channel support, the pair took a u-turn and rebounded sharply on the back of upbeat NZ current account data that showed larger than expected surplus of NZD1.306 billion in Q1 2016. 

The pair is now trading around the trend-channel resistance ahead of the schedule release of the GDT Price Index, later during the day. The key focus on Wednesday would remain on the FOMC decision, which has the potential to determine the near-term direction for the pair.

Technical levels to watch

On a sustained trade above trend-channel resistance near 0.7020-25 zone, the pair seems to extend the momentum immediately towards 0.7040 horizontal resistance before heading towards 0.7070-75 strong resistance. A follow through strength above 0.7070-75 resistance would signal resumption of the pair's near-term upward trajectory and hence, should assist the pair to reclaim 0.7100 handle and head towards RBNZ led swing highs resistance near 0.7145-50 area.

On the flip side, reversal from trend-channel resistance and a subsequent drop back below 0.7000 handle is likely to drag the pair back towards retesting the trend-channel support, currently near 0.6955-50 area. Sustained weakness below trend-channel support now seems to open room for an immediate drop towards 0.6900 handle support.