NZD/USD erases majority of Tuesday’s gains, back below 0.7200 mark

The NZD/USD pair is seen extending its retracement from a three-week high level touched yesterday and has now dropped back below 0.7200 handle to currently trade around 0.7190 region.

Wednesday's release of weaker Chinese services PMI print weighed on commodities and denting demand for commodity-linked currencies, including Kiwi. Adding to this, a tepid rebound in the greenback, as measured by US Dollar index, is also adding to the selling pressure surrounding the NZD/USD pair.

The pair on Tuesday rallied to 0.7256 as a broad based selling pressure around the US currency provided an additional boost to the pair's initial up-move led by a rise in inflation expectations for the second quarter of 2016.

Next on tap would be top tier releases from the US, which includes - ADP report on private sector employment and ISM non-manufacturing PMI data, later during NA trading session.

Technical levels to watch

On the immediate downside, 0.7165-60 area (weekly lows) seems to act as immediate support, below which the pair could extend its corrective move, even below 0.7100 handle, towards testing its next major support near 0.7065-60 region.

On the flip side, 0.7240 level now become immediate strong resistance, which if conquered should lift the pair immediately towards 0.7300 handle and pave way for continuation of the pair's upward trajectory in the near-term.