NZD/USD: recovery attempts stalling above the gap, where now?

NZD/USD is currently trading at 0.7170 with a high of 0.7174 and a low of 0.7154.

NZD/USD has shrugged of the opening offer in at what at first appeared to be a risk-off session following the latest missile tests from N.Korea. While N.Korea poses a threat, it still seems that markets view such actions more of as a deterrent than anything more sinister. 

"We see this latest provocation as in line with our base case – that tensions will remain elevated, yet contained, for some time," explained analysts at Nomura today, adding, "We will closely monitor geopolitical developments, especially the US and Chinese responses and any further provocation by North Korea." 

However, Pentagon chief James Mattis said earlier that any threat to the US or its allies by North Korea will be met with a "massive military response" and indeed the yen remains elevated on risk aversion while the Kiwi and higher beta currencies are unlikely to perform well. 

However, not all investors or all of the market's are quite convinced that things will blow over: 

• N.Korea tested a hydrogen bomb, it doesn’t look good - ANZ
• Asian stocks fall on NKorea tensions, Kospi drops 1%

 NZD/USD 1 day: 

"Continues to underperform amid flickers of life in the USD and election uncertainty, 0.7130 vulnerable," argued analysts at Westpac

NZD/USD 1-3 month: 

On a wider scope, the analysts explained that if the RBNZ remains firmly on hold, as we expect, and the US dollar rises on tighter Fed policy, then NZD/USD could fall as far as 0.70 by year end. "Pre-election jitters may also weigh on the NZD," the strategists added.

NZD/USD levels

On a bid, the 0.7200/30 levels guard 0.7280/00 as the next key and initial resistance area ahead of the 0.7337 recent highs and 0.7370 (9th Aug high). To the downside, the daily cloud base is located at 0.7139 and 0.7127 is the June 6 low and 0.7100.