NZD/USD drops to fresh 7-week lows, now eyeing 0.70 mark ahead Fedspeaks

The NZD/USD pair remained under intense selling pressure for the third consecutive day and dropped to its lowest level since Jan. 11.

Currently trading around 0.7025 region, the pair extended its rejection move from the 0.7235-40 resistance, and a subsequent break down below an important moving averages confluence support near 0.7145-35 region, against the backdrop of recent hawkish comments from various Fed officials supporting interest-rate hike move sooner rather than later.

Meanwhile, markets now seemed to be pricing-in higher possibilities for a Fed action at its upcoming meeting in less than two-week, which is being reflected by the recent up-surge in the US treasury bond yields. Rising yields underpinned the greenback demand, lifting the key US Dollar Index to a two-month high on Thursday and driving flows away from higher-yielding currencies - like the Kiwi.

The pair even failed to gain any respite from subdued greenback price action and modest retracement in the US treasury bond yields on Friday. Meanwhile, a cautious sentiment surrounding the commodity space, following yesterday's sharp slump, seems to have kept demand for the resource-linked currencies, including the Kiwi, suppressed and has failed to assist the pair to register even a slightest of recovery from seven-week lows. 

Friday's US economic docket features the release of ISM non-manufacturing PMI and would be looked upon for short-term trading impetus. Later during the day, speeches from various FOMC members, including the Fed Chair Janet Yellen, would grab all the attention and would be a key determinant of the pair's next leg of directional move.

Technical levels to watch

The ongoing bearish momentum seems strong enough to drag the pair further towards 0.70 psychological mark ahead of 0.6960-55 horizontal support with some intermediate support near 0.6985 level.

On the flip side, any recovery above 0.7050-55 immediate resistance might now confront resistance near 0.7085-90 level, above which a fresh bout of short-covering is likely to lift the pair back towards important moving averages confluence support turned resistance near 0.7135-45 region.