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  • US Dollar Index steadies below 94.50.
  • China and the US are planning to hold talks to avoid a trade war.
  • Employment report from New Zealand will be the next catalyst.

The NZD/USD pair tested the 0.68 handle in the early NA session before retracing the majority of its daily losses. As of writing, the pair was trading at 0.6815, still down 0.12% on the day.

Earlier today, the data from the U.S. showed that PCE Price Index increased 2.2% on a yearly basis in June to match May’s reading and fell short of the market estimate of 2.3%. More importantly, the core version of the same data, which excludes energy and food prices, came in at 1.9% compared to analysts’ expectation of 2%. On the other hand, personal income and personal spending growth came in line with the market consensus at 0.4%. Later in the session, the Chicago ISM’s PMI improved to its best level in six months at 65.5 in July from 64.1 in June.

The US Dollar Index, which plummeted to a daily low at 94.16, erased its daily losses and turned positive on the day but struggled to rise above the 94.60 mark ahead of tomorrow’s critical FOMC meeting. At the moment, the index is up 0.18% at 94.50.

In the meantime, Bloomberg claimed that the Chinese and the U.S. officials were planning to have a meeting this week to discuss the trade issues, potentially avoiding further conflict, and helped the NZD show some resilience against the buck.

In the early trading hours of the Asian session,  the Statistics New Zealand is going to release the Q2 unemployment rate, which is expected to remain steady at 4.4% while the total number of payrolls is seen increasing 0.4%. A higher-than-expected growth in employment is likely to provide a short-term boost to the kiwi and vice versa.

Technical outlook

The initial support for the pair aligns at 0.6800/0.6790 (daily low/psychological level/Jul. 30 low) ahead of 0.6760 (Jul. 27 low) and 0.6685 (Jul. 3 low). On the upside, resistances could be seen at 0.6855 (50-DMA), 0.6920 (Jun. 24 high) and 0.7000 (psychological level).