NZD/USD stages a minor recovery from 4-week lows, US CPI eyed

Having posted a session low near mid-0.7200s, the NZD/USD pair gained some traction and recovered part of previous session's slump to 4-week lows.

Currently trading around the 0.7285 region, the pair's modest recovery from lows lacked any clear catalyst and hence, could be solely attributed to some short-covering, especially after yesterday's post-RBNZ drop of nearly 120-pips. 

Meanwhile, a subdued US Dollar price action, amid escalating geopolitical tensions between the US and N. Korea, also remained supportive of the pair's modest recovery from the lowest level since July 13. 

   •  US: Geopolitical tensions on the rise – BBH

The pair might now be eyeing to move recover back above the 0.7300 handle as investors brace for the much awaited US CPI print, due to be released in a short while from now. 

   •  US: Headline inflation to rebound to 1.8% - TDS

The latest consumer inflation figures, coupled with speeches from a couple of FOMC members would influence the Fed's near-term monetary policy outlook and hence, might now play an important role in determining the near-term trajectory for higher-yielding currencies - like the Kiwi. 

Technical levels to watch

Momentum beyond the 0.7300 handle is likely to confront some resistance at 50-day SMA, around the 0.7315 region, above which a fresh bout of short-covering could lift the pair back towards 0.7355-60 horizontal resistance. On the flip side, sustained weakness below 0.7270 level might now turn the pair vulnerable to head towards testing its next support near 0.7225 level ahead of the 0.7200 handle.