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  • NZD/USD is struggling to stage a meaningful recovery.
  • US Dollar Index stays calm near 98 on Wednesday.
  • FOMC is scheduled to publish its May meeting minutes later in the day.

After erasing 30 pips on Tuesday, the NZD/USD pair continued to push lower and touched its lowest level since late October at 0.6493 before retracing its daily drop and turning flat on the day near the 0.65 handle.

The data published by the Statistics New Zealand showed that retail sales excluding automobiles in the first quarter of the year expanded by 0.7% on a quarterly basis following the 2% growth witnessed in the previous quarter and fell short of the market expectation of 0.9% to weigh on the kiwi. Furthermore, the bi-weekly GDT auction yielded a 1.2% drop in the price index on Tuesday.

Furthermore, the lack of new developments surrounding the U.S.-China trade dispute forced investors to remain on the sidelines and made it difficult for the pair to stage a recovery.

On the other hand, the US Dollar Index is moving sideways near the 98 mark on Tuesday, confirming the neutral outlook before the FOMC publishes the minutes of its May meeting later in the day. Previewing the event,  “The release of the May FOMC minutes on Wednesday should show a cautious  Fed  with a majority expecting transitory low inflation. Recall that post-meeting Chair Powell emphasized that the current policy was appropriate and that the FOMC saw no reason to change in either direction,” TD Securities analysts said.  

Technical levels to watch for

0.6500 (psychological level) is the first significant support level ahead of 0.6465 (Oct. 26, 2018, low) and 0.6425 (Oct. 8, 2018, low). On the upside, resistances could be seen at 0.6540 (May 21 high), 0.6580 (May 16 high) and 0.6615 (May 10 high).