- US Dollar Index returns to 101.50 area after rebounding to 101.90.
- Wall Street’s main indexes extend recovery on Wednesday.
- US Senate is expected to pass the coronavirus relief bill.
Boosted by the upbeat market mood, the NZD/USD pair started the day on a strong footing on Wednesday and touched its highest level in five days at 0.5911. However, the pair struggled to preserve its bullish momentum in the second half of the day and erased its daily gains. As of writing, the pair was down 0.1% at 0.5820.
DXY recovery remains short-lived
After testing the 101 handle earlier in the day, the US Dollar Index (DXY) staged a decisive recovery during the American trading hours and briefly turned positive on the day near 101.90.
The market mood soured while investors were waiting for the finalization and the details of the $2 trillion fiscal stimulus package and Wall Street’s main indexes edged lower after the opening bell to allow the USD to capitalize on risk-off flows.
However, with lawmakers reassuring that the coronavirus relief bill will provide the support the economy needs by stabilizing key national industries and helping individuals during layoffs, the risk sentiment recovered in the last hour. As of writing, the Dow Jones Industrial Average and the S&P 500 was up 3.7% and 2.2%, respectively. Moreover, the US Dollar Index returned to 101.50 to help the pair limit its losses.
There won’t be any macroeconomic data releases from New Zealand on Thursday and the USD’s market valuation is likely to continue to drive the pair’s movements.
Technical levels to watch for