NZD/USD pares early gains, returns to 0.6660 area ahead of FOMC

• NZD/USD turned south after advancing toward 0.6700 on Wednesday.
• US Dollar Index rebounds to 93.50 following an early slump.
• FOMC is not expected to announce any major changes in its monetary policy.

The NZD/USD pair climbed to a fresh daily high of 0.6680 during the early trading hours of the European session but struggled to preserve its bullish momentum. As of writing, the pair was flat on the day at 0.6660.

Focus shifts to FOMC

The greenback’s market valuation remains as the primary driver of the pair’s movements on Wednesday. Ahead of the FOMC’s monetary policy announcements, the US Dollar Index, which slumped to its lowest level in more than two years at 93.40, was seen losing 0.2% at 93.55.

Previewing the FOMC meeting, “we expect little new information from the July FOMC meeting,” said the Barclays Research Team. “Previous Fed communication has already delivered the message that monetary policy will likely be accommodative for quite some time, if not years.”

Meanwhile, Goods Trade Balance and Pending Home Sales data will be featured in the US economic docket. In the early Asian session on Thursday, the ANZ will publish Business Confidence and Activity Outlook data for New Zealand.

 In a recently published report, ANZ analysts determined 0.6450 as a key support and 0.6755 as a key resistance level for NZD/USD. “A lack of success in containing the virus and fiscal disagreement isn’t helping the USD; meanwhile New Zealand is open for business, albeit with deep scars,” analysts explained. “The easier road is the high road, even if it’s mostly a USD story.”

Additional technical levels