NZD/USD fails to extend Monday’s recovery momentum

The NZD/USD pair ran through fresh offers at higher level and has now erased all of its daily gains to three day high level of 0.7085.

Currently trading at a fresh session low, around 0.7055 level, the pair failed to build on Monday's strong recovery, from sub-0.70 mark, led by broad based greenback retracement. The overall US Dollar Index remains in the midst of 13-year highs amid continued expectations of Fed rate-hike move in December and prospect of aggressive fiscal stimulus from Trump administration. 

During early Asian session on Tuesday, the pair shrugged-off news of an earthquake hitting New-Zealand's Northern Island and attempted a move towards 0.7100 handle amid prevalent risk-on sentiment. Moreover, persistent recovery in commodity prices was further seen boosting demand for commodity-linked currencies - like Kiwi. 

Next in focus would be the release of existing home sales data from the US. However, market participants this week would remains focused on the release of FOMC meeting minutes and monthly durable goods orders, due on Wednesday, for fresh insights over the Fed's next monetary policy action and eventually help determine the pair's next leg of directional move.

Technical levels to watch

Below 0.7050, immediate downside support is pegged at the very important 200-day SMA near 0.7030 below which the pair is likely to turn vulnerable to once again break below 0.70 psychological mark support and head towards testing its next support near 0.6950 level. On the upside, bullish momentum back above 0.7070 resistance, leading to a subsequent move above session peak resistance near 0.7085, now seems to lift the pair beyond 0.7100 handle towards testing 0.7120 horizontal resistance.