NZD/USD turns flat on the day below 0.68 as USD preserves strength

• Supported by Fed Chairman Powell’s comments, the US Dollar Index advances to a daily high near 94.70.
• GDT auction shows the second straight decrease in the price index.

The NZD/USD pair reached a fresh weekly high at 0.6840 earlier today but lost its traction and erased all of its daily gains as the greenback extended its upside following the Fed Chairman Powell’s comments.

In his semi-annual testimony before the  Committee on Banking, Housing, and Urban Affairs, Powell reiterated that the U.S. economy was doing very well and further gradual rate hikes would be appropriate as they continue to move closer to their inflation and maximum employment targets. While responding to questions from Senators, Powell said raising rates was the only to extend the economic expansion and added that he was in favor of open trade and didn’t want to see trade barriers.

Although none of Powell’s comments were surprising, they weren’t dovish either. The US Dollar Index, which staged a downward correction on Monday, started a new march north toward the 95 mark and was last seen up 0.5% at 94.73.

On the other hand, after the GDT auction in New Zealand showed a 1.7% reduction in global daily prices to put some extra pressure on the kiwi.  

There won’t be any macroeconomic data releases from the United States in the remainder of the day and the USD valuation is likely to drive the pair’s price action.

Technical levels to consider

With today’s fall, the RSI indicator on the daily  chart  eased below the 50 mark, suggesting that the selling pressure is increasing. On the upside, the initial resistance for the pair aligns at 0.6795/0.6800 (Jul. 16 high/20-DMA/psychological level), 0.6855 (Jul. 9 high) and 0.6895/0.6900 (50-DMA/psychological level). Supports could be seen at 0.6750 (Jul. 15 low), 0.6685 (Jul. 2 low) and 0.6600 (psychological level).