NZD/USD recovers from 50-DMA support, RBNZ in focus

The NZD/USD pair managed to defend 50-day SMA support and has now recovered early lost ground to fresh three-week lows, near the 0.7300 handle.

With investors looking past Tuesday's upbeat US data, fresh tensions between the US and N. Korea dampened market sentiment around the US Dollar and helped the pair to bounce off lows. Moreover, traders seemed inclined to lighten their positions heading into Thursday's RBNZ monetary policy decision. 

   •  RBNZ to stick with a 'wait-and-see' policy stance - ING

Hence, a possible short-covering move, especially after the pair's recent fall of around 250-pips from over 26-month highs touched on June 27, might have also contributed to a modest recovery from lower levels. The recovery move, however, lacked any strong follow through traction and the pair held in the neutral territory, below mid-0.7300s through early NA session. 

Meanwhile, today's release of US nonfarm productivity and unit labor costs went unnoticed as investors’ attention remains glued to Friday's inflation figures, which alongside the RBNZ decision would contribute towards determining the pair's next leg of directional move.

Technical levels to watch

Immediate resistance is pegged near 0.7345-50 zone, above which the pair is likely to aim back towards reclaiming the 0.7400 handle before heading towards 0.7420 horizontal resistance. On the flip side, 50-day SMA near the 0.7310-0.7300 region remains an immediate support to defend, which if broken could accelerate the fall towards 0.7275-70 horizontal zone en-route 0.7220 support.