NZD/USD eases towards mid-0.73s as traders in Asia hit their desks

After losing nearly 100 pips on disappointing CPI data from New Zealand on Monday, the NZD/USD pair pared all of its losses on Tuesday to hit its highest level since early February at 0.7372 and went into a consolidation phase. At the moment, the pair is trading calmly around mid-0.73s.

Tuesday's upsurge was fueled by a broad-based sell-off witnessed on the greenback. Trump administration's efforts to repeal and replace the Affordable Care Act, widely known as Obamacare, crashed in the Senate late on Monday after two Republican senators opposed to voting "yes" on a bill that didn't have a replacement plan. "Analysts said there appear to be growing concerns that Trump's pro-growth agenda, including tax reform, infrastructure spending and deregulation may take longer to pass than initially thought," Reuters said in a recent report.

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The US Dollar Index, which measures the greenback against six major peers, plummeted to 94.27 in the early NA session, its lowest level in 11 months, before recovering to mid-94s towards the end of the day. The economic calendar won't be offering any important data in the Asian session, which could allow the DXY to correct higher as investors may look to take their recent profits off the table amid a lack of fundamental catalysts. Furthermore, the dismal performance of Wall Street could impact the major equity indexes in Asia negatively, making it difficult for the risk-bearing kiwi to gather further strength.

Technical outlook

FX Strategists at UOB Group argue that only a NY close above 0.7370 could lead to a sustained up-move and say, "From here, the outlook for this pair is still deemed as neutral even though NZD is expected to trade sideways even though the immediate bias is for a probe lower towards the bottom of the expected 0.7220/0.7330 consolidation range."