NZD/USD drops below 0.7200 ahead of US data
- NZD/USD struggles to extend rebound into second straight day.
- US Dollar Index recovers portion of Tuesday's losses.
- Eyes on US CPI data and Fed's Beige Book.
The NZD/USD pair capitalized on the broad-based USD weakness and snapped a three-day losing streak on Tuesday. However, the pair struggled to carry its bullish momentum into a second straight day and reversed its direction on Wednesday. As of writing, NZD/USD was down 0.37% on a daily basis at 0.7188.
USD valuation continues to impact NZD/USD's movements
Earlier in the day, the data from New Zealand showed that the ANZ Commodity Price Index in December increased by 1.8%. Although this reading beat the market expectation of 0.4%, it failed to provide a boost to the kiwi.
In the meantime, the US Dollar Index (DXY), which closed in the negative territory amid falling US Treasury bond yields on Tuesday, is staging a rebound and allowing the bearish pressure on NZD/USD to remain intact.
Ahead of the Consumer Price Index (CPI) data from the US, the DXY is up 0.18% on the day at 90.25. Markets expect the annual Core CPI to stay unchanged at 1.6% in December. A higher-than-expected reading could provide a boost to the USD. However, the US Federal Reserve uses the Personal Consumption Expenditures (PCE) Price Index as its preferred gauge of inflation, suggesting that any market reaction to the CPI data is likely to remain short-lived.
Meanwhile, the 10-year US Treasury bond yield is staying flat on the day at 1.125%, helping the USD stay resilient against its peers.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
