NZD/USD retreats to 0.7000 area, on track to close fourth straight day lower
- NZD/USD dropped to fresh three-week lows on Tuesday.
- US Dollar Index steadies around 93.20, looks to close flat.
- Wall Street's main indexes cling to small daily gains.
After closing the previous three trading days in the negative territory, the NZD/USD pair rose to a daily high of 0.7057 in the early European session but reversed its direction in the second half of the day. As of writing, the pair, which touched a three-week low of 0.6694 during the American trading hours, was down 0.3% on the day at 0.7003.
DXY rebounds as investors turn cautious
In the absence of high-tier macroeconomic data releases, risk perception remained the primary driver of NZD/USD's movements on Tuesday. Earlier in the day, the upbeat market mood, as reflected by strong gains in major European equity indexes, made it difficult for the USD to find demand.
Although Wall Street's main indexes opened decisively higher, they struggled to gather bullish momentum and the USD started to regain its strength, forcing NZD/USD to turn south. At the moment, the S&P 500 Index is unchanged on the day at 4,358 and the US Dollar Index is flat at 93.22.
In the meantime, the data from New Zealand revealed that the GDT Price Index increased by 1% following the latest auction. Nevertheless, this reading failed to trigger a noticeable market reaction.
On Wednesday, the People's Bank of China (PBoC) will publish the decision on the 1-year and 5-year loan prime rates. Investors expect the bank to leave those rates unchanged at 3.85% and 4.65%, respectively. However, a surprise rate cut due to the Evergrande crisis could provide a boost to the NZD during the Asian trading hours.
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.
