NZD/USD hits fresh yearly tops and retreats

The NZD/USD pair built on previous session's post-NZ CPI sharp recovery move and jumped to fresh yearly tops near the 0.7390 region, albeit quickly retreated few pips thereafter.

With investors looking past yesterday's softer NZ CPI print, the pair continued gaining traction through early European session on Wednesday and extended its well established near-term bullish trajectory. 

However, a modest pickup in the US Dollar demand, backed by a minor recovery in the US Treasury bond yields kept a lid on higher-yielding currencies, with the pair quickly reversing around 20-pips from the highest level since Nov. 2016 touched in the past hour. 

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Against the backdrop of growing doubts over the US President Donald Trump's ability to push through pro-growth economic policies, sentiment around the greenback seems to have turned highly bearish. Hence, a follow through momentum, even beyond the 0.7400 handle, now seems a distinct possibility.

Today's US economic docket features the release of building permits and housing starts, which seems unlikely to dent the prevalent strong bullish sentiment surrounding the major but would be looked upon for short-term trading impetus.

Technical levels to watch

Bulls would be eyeing for a sustained move beyond 0.7385-90 region, above which the pair is likely to aim towards testing Sept. 2016 daily closing highs resistance near mid-0.7400s, with some intermediate hurdle near 0.7420-25 area.

On the flip side, any pull-back from higher levels now seems to find immediate support near 0.7345 level, below which a fresh bout of profit taking could drag the pair towards 0.7315 horizontal support. A follow through weakness could further get extended back towards yesterday's swing lows support near 0.7265-60 region.