NZD/USD extends slide toward 0.7100 on renewed USD strength
- NZD/USD is pushing lower toward 0.7100 on Thursday.
- US Dollar Index reclaims 94.00 after closing in the red on Wednesday.
- Coming up: Weekly Initial Jobless Claims and Q3 Unit Labor Costs data from US.
The NZD/USD pair managed to close in the positive territory on Wednesday but reversed its direction on Thursday. As of writing, the pair was down 0.4% on the day at 0.7130.
DXY advances beyond 94.00
On Wednesday, the initial reaction to the US Federal Reserve's policy announcements and Chairman Jerome Powell's remarks on the rate outlook caused the greenback to weaken against its rivals.
The Fed decided to reduce its asset purchases by $15 billion per month as expected but Powell reiterated that they will not be automatically raising the policy rate when the quantitative easing program concludes.
Nevertheless, the greenback didn't have a difficult time regaining its traction as the market pricing of a 60% chance of a rate hike by June 2022 remained unchanged following the Fed event. As of writing, the US Dollar Index (DXY) was up 0.45% on the day at 94.27.
Later in the session, the weekly Initial Jobless Claims and the third-quarter Unit Labor Costs data will be featured in the US economic docket. However, these data are unlikely to upbeat sentiment surrounding the dollar. In the meantime, the benchmark 10-year US Treasury bond yield is down more than 2% on a daily basis, suggesting that the DXY's upside could be capped in the second half of the day in case yields continue to edge lower.
Technical levels to watch for