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  • NZD/USD stages a rebound after dropping toward 0.7200.
  • USD’s market valuation continues to drive NZD/USD’s movements.
  • Market sentiment improves ahead of the American session.

After fluctuating in a relatively narrow band during the Asian session, the NZD/USD pair lost its traction and dropped to its lowest level in more than a week at 0.7210. With risk flows returning to market during the European trading hours, the pair reversed its direction and was last seen trading virtually unchanged on the day at 0.7261.

DXY retreats toward 91.00

In the absence of significant fundamental drivers, the USD’s market valuation continues to impact NZD/USD’s movements. The US Dollar Index, which touched its best level since early February at 91.39 on Tuesday, is currently posting small daily gains at 91.11 as the improving sentiment is making it tough for the greenback to find demand.

Reflecting the upbeat mood, major European equity indexes are up between 0.5% and 0.75%. Furthermore, the S&P 500 Futures are little changed after falling as much as 0.5% earlier in the day.

The US economic docket will feature the ISM-NY’s Business Conditions Index and the IBD/TIPP Economic Optimism Index on Tuesday.

Market participants are likely to remain focused on the performance of Wall Street’s main indexes in the second half of the day. If US stocks manage to build on Monday’s impressive gains, NZD/USD could start pushing higher amid USD weakness.

On Wednesday, January Building Permits and February ANZ Commodity Price figures will be released from New Zealand.

Technical levels to watch for

 

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