- US Dollar Index extends higher for the third straight day.
- NZD/USD drops to two-week lows below 0.68.
- ISM NY Business Conditions Index and monthly factory orders are next on the calendar.
The broad-based greenback strength following yesterday’s FOMC announcements remained intact on Thursday and the NZD/USD pair dropped to its lowest level since July 20 at 0.6750. After finding support at that level, the pair retraced a small portion of its daily losses and was last seen trading at 0.6763, losing 0.43% on the day.
Although the Federal Reserve didn’t make any significant changes to its monetary policy statement compared to June’s publication, the odds of the fourth rate hike in December increased. According to the CME Group FedWatch Tool, markets are now pricing a 70% probability of a 25 bps rate increase in December. Meanwhile, today’s data from the United States showed that weekly jobless claims increased by 1K to 218K for the week ending July 27 vs. 220K expected.
Later in the session, the ISM NY is going to publish its Business Conditions Index and the US Census Bureau is going to release factory orders figures for June. However, ahead of tomorrow’s critical NFP report, the market reaction to today’s numbers are likely to stay limited.
Technical outlook
WÄ°th the pair recording losses for the third straight day, the RSI indicator on the daily chart continues to edge lower below the 50 mark, suggesting that the bearish momentum is building up. On the downside, 0.6750 (daily low) could be seen as the first support ahead of 0.6690 (Jul. 3 low) and 0.6600 (psychological level). Near-term resistances align at 0.6800 (psychological level/daily high), 0.6850 (50-DMA) and 0.6920 (Jun. 24 high).
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