NZD/USD bears remain in full control, now eyeing multi-month lows
• Weighed down by surging US bond yields.
• US tax bill headlines to remain in focus.
The NZD/USD pair remained heavily offered through the early NA session and has now moved within striking distance of multi-month lows touched in late October.
A sharp rebound in the US Treasury bond yields, supported by Wednesday's US economic data that showed an uptick in the underlying inflation, helped the US Dollar to stage a solid rebound and was eventually seen weighing heavily on higher-yielding currencies - like the Kiwi.
• USD: Impressive data pulse - Westpac
The greenback got an additional boost from a report, via Politico, that House Republicans are confident of having sufficient support to pass a massive overhaul of the US tax code. Investors, however, are likely to remain cautious ahead of a key vote on the long-awaited US tax legislation, due later today.
• US: Tax reform is raising expectations – Goldman Sachs
In the meantime, the US economic docket would be looked upon for some short-term trading impetus but is likely to be overshadowed by some repositioning trade ahead of the key event risk.
Technical levels to watch
A follow-through selling pressure below 0.6830 level is likely to accelerate the fall towards the 0.6800 handle before the pair eventually drops to its next major support near the 0.6775-70 region.
On the upside, recovery attempts back above 0.6850 level might now confront fresh supply near the 0.6875-80 region and is closely followed by a strong hurdle near the 0.6900 handle.