NZD/USD headed back to last week’s 10-month lows

The NZD/USD pair extended previous session's sharp reversal move from six-day tops and fell farther below the 0.6900 handle, back closer to 10-month lows touched in the previous week.

After an initial bullish reaction to six-day tops on upbeat NZ jobs report, the pair came under intense selling pressure and tumbled nearly 100-pips from highs. Perceived hawkish FOMC statement added to Wednesday's better-than-expected US economic data (ADP report and ISM non-manufacturing PMI) and lifted the US treasury bond yields. Rising bond yields helped the US Dollar to hold on to its post-Fed gains and weighed heavily on higher-yielding currencies - like the Kiwi.

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With the FOMC showing little concern over slowing economic growth during the first-quarter of 2017, investors seemed convinced that the Fed would eventually move towards raising rates as early as in June. Hence, a follow through selling pressure, with the pair breaking below yearly lows and extending its near-term depreciating move remains a distinct possibility.

Later during the NA session, the US economic docket might provide some short-term trading opportunities ahead of the quarterly NZ inflation expectations figures, due during early Asian session on Friday. 

Technical levels to watch

Immediate support is pegged near mid-0.6800s, which if broken decisively is likely to accelerate the slide towards 0.6810 support before the pair eventually drops to test 0.6775-70 support area.

On the flip side, any recovery attempts above the 0.6900 handle might now confront strong hurdle near 0.6935 level, which if cleared could lift the pair towards 50-day SMA near the key 0.70 psychological mark.