NZD/USD pare losses, defends 0.70 handle; RBNZ in focus

After failing to clear the 0.7100 handle, the NZD/USD pair traded with mild bearish bias for the second consecutive session and dropped closer to the key 0.70 psychological mark.

The pair, however, has managed to recover few pips from session low and is currently trading around 0.7030 region. A fresh wave of global risk aversion, coupled with a modest US Dollar recovery from multi-week lows, has been key factors weighing on the major on Wednesday. 

The pair, however, remained within striking distance of nearly three-week highs touched on Tuesday as market participants now look forward to the RBNZ monetary policy decision, scheduled to be announced during early Asian session on Thursday. The New-Zealand central bank is universally expected to leave its cash rate unchanged at 1.75%.

Also extending some support to the pair is the outcome of the latest NZD daily auction on Tuesday that showed a surprise increase in whole milk powder, with the overall GDT Price Index rising by 1.7%.

From the US economic docket, the only release of existing home sales data for February would be looked upon for some short-term trading opportunities.

Technical levels to watch

Bears would be eyeing for a decisive break the 0.70 handle, below which the pair is likely to accelerate the slide towards 0.6975-70 support area before eventually dropping below mid-0.6900s to retest 0.6920-15 support area.

On the upside, momentum above 0.7055 level could get extended towards the 0.7100 handle, which if conquered should assist the pair back towards an important moving averages (50 & 200-day SMAs) confluence resistance near 0.7145-50 region.