NZD/USD stages a goodish recovery after yesterday's slump to 3-week lows

The NZD/USD pair staged a goodish recovery on Wednesday and recovered part of previous session's slump to three-week lows.

The pair caught some fresh bids at lower levels and managed to defend the key 0.7200 handle amid broad based US Dollar weakness led by renewed concerns over the Trump administration's alleged connection with Russia. 

Adding to this, a modest retracement in the US Treasury bond yields and positive sentiment around commodity space was further seen lending support to higher-yielding/commodity-linked currencies - like the Kiwi.

It, however, remains to be seen if the pair is able to build on the recovery move or faces some fresh supply at higher level as investors now look forward to the key two-day testimony by the Fed Chair Janet Yellen on monetary policy outlook.

Yellen's comments would shed fresh light over the central bank's near-term monetary policy outlook and help determine the next leg of directional move for the major.

   •  Yellen to guide the market towards balance sheet normalisation – Deutsche Bank

Technical levels to watch

On a sustained move beyond mid-0.7200s, a bout of short-covering might lift the pair back towards the 0.7300 handle with some intermediate resistance near 0.7270 level.

Meanwhile, on the downside, 0.7225 level now seems to protect the immediate downside, which if broken could accelerate the slide back towards the 0.7200 handle en-route its next support near 0.7170 level.