NZD/USD taps 0.74 handle amid notable USD weakness
• Weaker US bond yields add to the USD woes.
• Follow-through buying needed to confirm additional gains.
• US ADP report to provide some impetus ahead of FOMC.
The NZD/USD pair built on previous session's solid rebound from over one-week lows and retested the 0.7400 handle, albeit retreated few pips thereafter.
The US President Donald Trump’s first State of the Union address did little to ease the prevailing bearish sentiment surrounding the US Dollar and helped the pair to catch fresh bids on Wednesday.
Adding to this, a follow-through retracement in the US Treasury bond yields provided an additional boost to the higher-yielding currency and further collaborated to the pair's strong upsurge through the early European session.
It, however, remains to be seen if the momentum is strong enough to continue boosting the pair further beyond the 0.7400 handle or the rally once again fizzles out at higher levels as investors brace for today's key event risk - the highly anticipated FOMC decision, due to be announced later today.
In the meantime, the USD/US bond yield dynamics might continue to act as key determinants of the pair's momentum ahead of the release of ADP report on the US private sector employment.
Technical levels to watch
A convincing move beyond the 0.7400 handle is likely to accelerate the up-move back towards 0.7435 supply zone, above which the pair is likely to aim towards reclaiming the key 0.75 psychological mark.
On the flip side, 0.7360-55 area now seems to protect the immediate downside, which if broken might prompt some additional profit-taking slide back towards the 0.7300 handle en-route 0.7275-70 support.