NZD/USD consolidates near 0.7020 as US dollar weakens

• NZD/USD trades cautiously in the early Asian session.
• NZD dollar recovers some of its previous week’s losses in the past two sessions.
• USD retraces from the weekly highs after Jerome Powell’s testimony.

The NZD/USD pair edges higher in the initial Asian session on Tuesday. The pair continues with its downside momentum since the beginning of the month, after testing the high near the 0.7320 level.

At the time of writing, NZD/USD is trading at 0.7024, up 0.01% for the day.

The US Dollar Index (DXY), which measures the greenback performance against its six major rivals, eases from the high of 92.41 level. The US dollar moves in tandem with the US 10-year benchmark yields, which retreats toward 1.46%.

Investors reduced their investment in the US dollar after Fed chair Jerome Powell on Tuesday reaffirmed that the central bank aims to propose a “ broad and inclusive” recovery of the job market, and not just looking at the inflation.

The focus on the economic recovery and the delay in the rate hike due to the fear of the onset of inflation is justified. The greenback reacted negatively to the statement.

The US Existing Home Sales fell to 5.8million in May, compared to the market consensus at 5.72 million.

On the other hand, the Kiwi gained some ground as investors flew to riskier assets as market volatility subsided after Fed’s Powel cools down inflation anxiety. On the domestic side, New Zealand’s Westpac-McDermott Miller Consumer Confidence Index rose 107. 1 in Q2, from 105.2 in the previous quarter.

It is worth noting that S&P 500 Futures are trading at 4,236, down 0.01% for the day.

As for now, the dynamics around the US dollar continue to influence the pair’s performance for the time being.

NZD/USD additional levels