NZD/USD: Recovery momentum weakens ahead of 0.75

After easing to a session low of 0.7462 in the early NA trading hours, the NZD/USD started a recovery move towards the 0.75 handle but struggled to extend this move as the DXY gained traction towards the 93 mark. At the moment, the pair is trading at 0.7473, losing 0.5%, or 40 pips on the day.

Today's mixed batch of macro data from the United States triggered a USD sell-off and pushed the US Dollar Index to a session low at 92.64. However, as investors continued to assess the data, the index reversed course and erased all of its losses while inching closer to the 93 handle. At the moment, the index is at 92.96, up 0.3% on the day. 

While the personal income growth in the U.S. failed to meet the market expectation of 0.4% in June, the core PCE price index remained steady at 1.5% on a yearly basis in the same month and surpassed the market consensus of 1.3%. Other data from the U.S. showed that the manufacturing sector continued to expand in July while construction spending contracted by 1.3% in June. 

On the other hand, the fact that the NZ GDT price index came in at -1.6% after rising 0.2% in the previous auction might have put some extra pressure on the pair as well. The next significant data release will be in the Asian session when New Zealand releases its employment change for the second quarter, which is expected to ease to 0.7% from 1.2%. A weak reading could increase the selling pressure on the pair.

Technical outlook

A daily close below the 0.75 handle could open the door for further losses towards 0.7380 (Jul. 27 low), 0.7310 (50-DMA) and 0.7260 (Jul. 17 low). On the upside, resistances align at 0.7500 (psychological level), 0.7560 (Jul. 27 high) and 0.7640 (Apr. 30, 2015, high).

Today's data from the U.S.

• US: Personal income decreased $3.5 billion (less than -0.1%) in June
• US: PCE price index increased less than 0.1%
• US: Manufacturing PMI registered 53.3 in July, up from 52.0 in June - Markit
• US: Economic activity in the manufacturing sector expanded in July - ISM