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Oct 17, 2017 04:52 PM

NZD/USD turns negative near 0.7160 as DXY advances to mid-93s

After adding more than 20-pips on upbeat inflation data from New Zealand during the Asian trading hours, the NZD/USD pair went into a consolidation phase before erasing its daily gains in the early NA session. At the moment, the pair is trading at 0.7162, losing 0.07% on the day.

  • NZ: CPI rose 0.5% in Sep quarter, annual inflation 1.9% - Westpac

The greenback's increasing strength seems to be the primary reason behind the pair's recent fall. The US Dollar Index, which started the week on a high note and closed the day above the 93 mark on Monday, gathered traction following the robust data from the United States on Tuesday and renewed its weekly high at 93.52. As of writing, the index is at 93.50, up 0.4% on the day.

According to the data released by the U.S. Bureau of Labor Statistics, following a 0.6% increase in August, import prices in the U.S. rose 0.7% in September, beating the market estimate of 0.4%. Additionally, industrial production, which contracted 0.7% in August, rebounded in September and expanded 0.3%. Furthermore, capacity utilization edged higher to 76% from 75.8%. 

  • US: Import prices rise 0.7% in Sept on higher fuel prices; export prices increase 0.8%
  • US: Industrial production rose 0.3 percent in September

There won't be any significant macroeconomic data releases from New Zealand on Wednesday and the DXY movements are likely to continue to dominate the pair's price action.

Technical outlook

On the upside, 0.7200 (psychological level/last week's high) remains as the first critical resistance ahead of 0.7280 (100-DMA) and 0.7345 (Sep. 22 high). On the downside, supports could be seen at 0.7150 (200-DMA), 0.7100 (psychological level) and 0.7055 (Oct. 10 low). The RSI indicator on the daily graph started to move lower below the 50 handle with today's retreat, suggesting that the pair is likely to extend its losses.

  • NZD/USD stays neutral between 0.7130 and 0.7240 – UOB