NZD/USD retreats back to 0.68 area ahead of US data

• New Zealand reports a trade deficit in June.
• US Dollar Index struggles to move away from mid-94s.
• New home sales change will be released in the NA session.

The NZD/USD pair dropped to a daily low at 0.6786 during the early trading hours of the Asian session following the disappointing data releases from New Zealand. However, the bearish pressure surrounding the greenback allowed the pair to recover its losses. After touching a session a top 0.6820, the pair went into a consolidation phase ahead of the U.S. data and was last seen trading at 0.6805, where it was virtually unchanged on the day.

The data released  by the Statistics New Zealand on Wednesday showed that the trade balance dropped to -$113 million in June from a surplus of $208 million in May and failed to meet the market expectation of +$200 million. On a yearly basis, the trade deficit increased to $4.030 billion from $3.680 billion.

Later in the session, new home sales data from the United States will be looked upon for fresh impetus. Monday’s data showed that existing home sales continued to contract amid rising prices and a negative reading shouldn’t be a big surprise. The US Dollar Index, which tracks the greenback against a basket of six major currencies, was last seen down 0.1% on the day at 94.52.

Technical outlook

Despite today’s fluctuations, the RSI indicator on the daily chart stays near 50, suggesting a near-term outlook.  On the downside, supports align at 0.6750 (Jul. 11 low), 0.6715 (Jul. 20 low) and 0.6685 (Jul 2/3 low).  Resistances could be seen at 0.6820 (daily high), 0.6875 (50-DMA) and 0.6920 (Jun. 24 high).