NZD/USD recovery now seems capped at 0.6900 handle

The NZD/USD pair ran through fresh offers and failed to build on to its recovery momentum to 0.6900 handle.

Currently trading around 0.6885 region, the pair remains within striking distance of session low and over 6-1/2 month low touched last week. Growing expectations that President-elect Donald Trump’s proposed fiscal stimulus would lead to strong US economic growth continue to underpin the US Dollar. This coupled with hawkish Fed outlook is further weighing on higher-yielding currencies - like the Kiwi. 

From technical perspective, the pair seems to have entered a consolidation phase following its recent sharp slide to the lowest level since early June. Moreover, any attempts of a minor recovery are being sold into, clearly pointing to additional bearish slide even from current levels. 

Next on tap would be the Conference Board's US consumer confidence index for December, which is expected to better previous month's reading of 107.1 and might provide an additional boost to the already stronger greenback. 

Technical levels to watch

Weakness below 0.6875 level is likely to find support near 0.6860 region (multi-month lows) below which a fresh leg of weakness is likely to drag the pair towards 0.6800 round figure mark with some intermediate support near 0.6835-30 region. 

On the upside, sustained recovery above 0.6900 handle is likely to lift the pair immediately towards 0.6930 resistance area, which if cleared might trigger a short-covering rally towards 0.6970-75 resistance, en-route 0.7000 psychological mark.