NZD/USD surrenders early gains beyond 0.71 handle to near three-month highs

The NZD/USD pair faded early bullish spike and surrendered all of its early gains to near three-month highs, beyond the 0.7100 handle.

Spot failed to sustain its move above the very important 200-day SMA and ran through some fresh offers at higher levels amid strong recovery in the US treasury bond yields, which underpinned the US Dollar demand and dented demand for higher-yielding currencies - like the Kiwi.

Currently hovering around session lows near 0.7085 region, the pair initially gained traction after the RBNZ's semi-annual Financial Stability Report highlighted that country's financial system is on track and that the risks have reduced in the past six months. The report, however, raised concerns over elevated global policy uncertainty and high debt burdens in a number of countries, which eventually failed to assist the pair to build on early up-move.

With the pair failing to clear an important hurdle, it would be interesting to see if trader would be inclined to take some profits off the table or the current pull-back is being utilized as an opportunity to initiate some fresh long positions.

Moving ahead, traders would now take cues from today's US economic docket, featuring the release of Chicago PMI and Pending Home Sales Data, later during the NA session.

Technical levels to watch

Immediate support is pegged near 0.70.75-70 zone, which is closely followed by 100-day SMA support near 0.7055 region. Retracement back below 100-day SMA support might suggest that the pair might have topped in the near-term and hence, could accelerate the slide back towards the key 0.70 psychological mark.

On the flip side, bulls would be eyeing for a sustained move beyond 200-day SMA hurdle near 0.7105-10 region, above which the pair seems all set to head towards testing 0.7155 intermediate horizontal resistance ahead of 0.7185-90 strong hurdle.