NZD/USD slides to two-week lows near 0.6250

• Inflation in New Zealand rose more than expected in the third quarter.
• US Dollar Index moves sideways near 98.30 following Tuesday’s fall.
• Retail sales in the United States (US) is expected to increase by 0.3% in September.

With the initial reaction to the inflation data from New Zealand, the NZD/USD pair spiked to a daily high of 0.6320 but failed to preserve its momentum and slumped to its lowest level in two weeks at 0.6245. As of writing, the pair was trading at 0.6248, losing 0.7% on a daily basis.

Statistics New Zealand reported that inflation, as measured by the Consumer Price Index (CPI), ticked up to 0.7% on a quarterly basis in the third quarter from 0.6% in the second quarter. On a yearly basis, the CPI fell to 1.5% from 1.7% but came in better than the market expectation of 1.4%. Earlier in the day on Tuesday, the Global Dairy Trade (GDT) auction yielded a 0.5% increase in the GDT Price Index.

USD continues to react to Brexit developments

Meanwhile, heightened hopes of a Brexit deal on Tuesday put the Greenback under bearish pressure on Tuesday and caused the US Dollar Index to drop to its lowest level since September 20th at 98.16. However, with the latest headlines failing to reaffirm the expectations of a Brexit deal, the index recovered from its lows and caused the pair to continue to edge lower. At the moment, the index is up 0.03% on the day at 98.35.

Later in the session, the US economic docket will feature September retail sales data. Chicago Federal Reserve Bank President Charles Evans and  Federal Reserve Governor Lael Brainard are scheduled to speak during the American trading hours.

Technical levels to watch for