NZD/USD recovers back to 200-DMA amid broad based USD retracement

A broad based greenback retracement helped the NZD/USD pair to snap eight days of losing streak and stage a minor recovery back closer to the very important 200-day SMA.

Currently trading at a fresh session peak level around 0.7020-25 band, the pair recovered from an early drop to sub-0.70 handle and has now reversed minor losses recorded on Friday. The greenback witnessed a profit taking slide, with the overall US Dollar Index turning defensive and retreating from the highest level since March 2003. 

Meanwhile, a broad based recovery in commodity prices is further supporting the pair's recovery from nearly 4-month low touched during early Asian session. Further recovery, however, might be limited as rising expectations of a December Fed rate-hike might continue to weigh on higher-yielding currencies - like Kiwi.

With an empty US economic docket, investors will focus on the official release of New-Zealand quarterly retail sales data, slated for release during early Asian session on Tuesday. A press leak on Friday showed NZ quarterly retail sales recorded a growth of 0.9% for the third quarter of 2016. 

Technical levels to watch

From current levels, momentum above 200-day SMA resistance near 0.7025-30 region might now confront resistance near 0.7060 region above which a fresh bout of short-covering might lift the pair back towards 0.7100 handle. On the downside, 0.7000 psychological mark remains immediate strong support to defend, which if broken decisively could accelerate the slide immediately towards 0.6950 horizontal support.

To learn more about this topic, check our video analysis