NZD/USD rebounds above 0.7100 on modest USD weakness

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  • NZD/USD fell to its lowest level in more than 10 days at 0.7074.
  • US Dollar Index stays in the negative territory on Wednesday.
  • Focus shifts to mid-tier data releases from the US.

Despite a sharp rebound witnessed in the early American session, the NZD/USD pair ended up closing in the negative territory on Wednesday. With the risk-averse market mood helping the greenback find demand during the Asian trading hours on Thursday, the pair touched its lowest level in nearly two weeks at 0.7074 before staging a rebound. As of writing, the pair was up 0.17% on the day at 0.7108.

DXY loses traction on Wednesday

The renewed USD weakness in the European session seems to be helping NZD/USD edge higher. The US Dollar Index (DXY) is currently losing 0.2% on a daily basis at 92.46. On Tuesday, the data published by the US Bureau of Labor Statistics showed that the Core Consumer Price Index edged lower to 4% on a yearly basis in August from 4.3% in July. Although this reading weighed on the USD, Wall Street’s main indexes’ poor performance helped the DXY retrace its decline.

On Wednesday, the US Federal Reserve will release the August Industrial Production and Capacity Utilization data. The Federal Reserve Bank of New York’s Empire State Manufacturing Index will be featured in the US economic docket as well.

Meanwhile, the S&P 500 futures are up 0.25%, suggesting that risk flows could dominate the financial markets and help NZD/USD push higher. On Thursday, the second-quarter Gross Domestic Product data from New Zealand will be looked upon for fresh impetus.

Technical levels to watch for