NZD/USD pares early losses, turns positive above mid-0.68s

• NZD/USD recovers from 2018 lows.
• GDP growth loses momentum in New Zealand.
• DXY reverses course in the NA session and slumps to mid-94s.

The NZD/USD pair plummeted to its worst level since December of 2017 at 0.6825 during the early trading hours of the Asain session on Thursday but was able to pare all of its losses in the NA session. As of writing, the pair was trading at 0.6875, adding 0.17% on the day.

Kiwi came under a broad-based selling pressure after the data from New Zealand showed that the GDP growth in the first quarter of the year eased to 0.5% on a quarterly basis from 0.6% in the previous quarter. On a yearly basis, the GDP grew by 2.7%. Details of the report showed that the household spending was unchanged in Q1.  

In the second half of the day, the greenback started losing its strength against its rivals as the weak market sentiment ramped up the demand for safe-havens and caused T-bond yields to plummet in the United States. With this latest drop, the DXY failed to stay above the 95 mark for the third straight day and was last seen at 94.55, where it was down 0.23% on the day.

The next catalyst for the pair could be the annual visitor arrivals data for May from New Zealand. In April, the number of tourists visiting the country contracted by 9% and a rebound in this number could help the kiwi continue to recover its weekly losses.

Technical outlook

On the upside, resistances align at 0.6900 (psychological level), 0.6940 (Jun. 19 high) and 0.6990/0.7000 (50-DMA/psychological level). Supports could be seen at  0.6825 (daily low), 0.6800 (psychological level) and 0.6775 (Nov. 17 low).