NZD/USD retreats from three-month peaks, back below 0.7350 level

The NZD/USD pair trimmed some of its strong gains to three-month highs, albeit has held in positive territory for the fourth consecutive session.

Currently trading around 0.7340 region, a sharp increase in March quarter inflation expectations released by RBNZ on Tuesday assisted the pair to build on recent up-move and lifted it to its highest level since Nov. 9. According to the report, yearly CPI is expected to increase to 1.92%, up from 1.68% anticipated in December quarter, and dampened likelihood of further monetary easing by RBNZ. 

The pair, however, stalled its up-move near 0.7375 level amid extended greenback recovery move, with the key US Dollar Index reversing mixed US jobs data-led slide and now holding steady above 100.00 psychological mark. 

Investors now look forward to the release of NZ GDP price Index and trade balance data for short-term trading impetus. Spotlight, however, would remain on RBNZ's monetary policy decision during early Asian session on Thursday, which would help investors to determine the pair's next leg of directional move.

Technical levels to watch

A follow through retracement is likely to find support near 0.7325 level below which the pair is likely to break below 0.7300 handle and head towards 0.7275-70 horizontal support. On the upside, sustained momentum above 0.7360-65 region now seems to lift the pair towards 0.7400 handle, which if cleared might continue to boost the pair further towards Sept. 2016 daily closing highs resistance near 0.7450 region.