- The NZD/USD dropped to a five-day low at 0.6740 on Wednesday.
- The modest USD sell-off in the second half of the day allows the pair to make a decisive recovery.
After closing the previous day in the negative territory, the NZD/USD pair continued to push lower on Wednesday and touched its lowest level of the week at 0.6740 before reversing its course in the NA session. At the moment, the pair is up 0.16%, or 12 pips, on the day at 0.6800.
The bearish pressure witnessed on the pair during the first half of the day seemed to be a product of a broad increase in the USD demand, which lifted the US Dollar Index to its highest level in three weeks at 95.18. However, the disappointing macroeconomic data releases from the U.S. forced the index to retrace its daily gains and helped the kiwi gain traction.
The report released jointly by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development showed that housing starts in June contracted by 12.3% and building permits decreased by 2.2%, both readings falling way short of the market expectations. At the moment, the DXY is virtually unchanged at 94.75.
Later in the session, the Fed is going to publish its Beige Book. Investors will be focused on how the sentiment is looking surrounding the Trump administration’s trade policies and their potential impact on the economy.
During the early Asian session on Thursday, employment data from Australia will be published and any sharp fluctuations seen in the AUD/USD pair could impact the positively-correlated NZD/USD pair’s price action.
Technical levels to consider
With this latest recovery, the RSI indicator on the daily chart rose toward the 50 mark, suggesting that the bearish pressure is easing. With a daily close above 0.6800 (daily high/psychological level), the pair could extend its upside toward 0.6855 (Jul. 9 high) and 0.6890/0.6900 (50-DMA/psychological level). On the downside, supports could be seen at 0.6750/40 (Jul. 15 low/daily low), 0.6685 (Jul. 2 low) and 0.6600 (psychological level).
Share
