NZD/USD erases upbeat Chinese inflation-led gains

The NZD/USD pair erased upbeat Chinese inflation data-led bullish spike to 0.7133 and has now slipped back below 0.7100 handle.

Currently trading around 0.7095 level, renewed greenback strength, as measured by the overall US Dollar Index, has been the key factor that hindered further up-move for the pair. Moreover, possibility that investors might have utilized Friday's bounce back to lighten the bullish bets or initiate fresh short positions, given speculation of further rate-cut action by RBNZ at its November meeting, could be another reason contributing to the pair's reversal from session  high. 

Meanwhile, the greenback regained its near-term bullish momentum on Friday following yesterday's corrective slide from seven-month high as market participants now look forward to US macro releases and the Fed Chair Janet Yellen's speech for fresh impetus during US trading session.

Technical levels to watch

A follow through selling pressure below session low support near 0.7075 is likely to drag the pair back towards 0.7050 support, which if broken would turn the pair vulnerable to break through 0.7000 psychological mark and head towards testing the very important 200-day SMA support near 0.6940 region.

On the flip side, momentum above 0.7130 (session high resistance) seems to boost the pair immediately towards 100-day SMA resistance near 0.7165 region above which a fresh bout of short-covering could lift the pair back towards 0.7200 handle.