NZD/USD: tepid recovery capped at 100-DMA

The NZD/USD pair traded with mild positive bias through early European session, albeit the up-move remained capped at 100-day SMA hurdle.

Bulls continue to defend the very important 200-day SMA support, with the pair snapping four consecutive days of losing streak and staging a modest recovery at the start of a new trading week. 

Renewed geopolitical tension stemming out of the Korean Peninsula triggered a fresh wave of US Dollar selling pressure and helped the pair to regain some traction on Monday. 

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However, the prevalent positive bias around the US Treasury bond yields, supported by growing conviction that the Fed would eventually start unwinding its massive $4.5 trillion balance sheet in September, kept a lid on any further up-move for higher-yielding currencies - like the Kiwi. 

With the US markets closed in observance of Labor Day holiday, the pair remains at the mercy of the US bond yield dynamics and broader market sentiment surrounding the greenback.

Technical levels to watch

On a sustained move beyond 100-day SMA hurdle near the 0.7180-85 region, the pair is likely to aim towards surpassing the 0.7210 intermediate resistance and test its next barrier near 0.7250-55 zone.

On the flip side, 200-day SMA near the 0.7135-30 region remains immediate support to defend, which if broken would turn the pair vulnerable to break below the 0.7100 handle and dart towards testing 0.7055-50 horizontal support.