NZD/USD struggling below 0.7100 level

The NZD/USD pair dropped further during Asian trading session on Wednesday and dipped below 0.7100 handle, weighed down by a broad based US Dollar strength and decline in the GDT price index.

On Tuesday, the pair erased all of its previous trading session gains as renewed worries over the economic implication of the historic Brexit referendum boosted demand for the greenback and dented demand riskier assets - like commodities, dragging commodity-linked currencies - like the Kiwi, lower. 

Adding to bearish sentiment led by global uncertainty, the latest action data showed international dairy prices edging lower. The GDT price index fell by 0.4% since the previous sale last month and is seen weighing on the New-Zealand Dollar on Wednesday.  

Focus now shifts to the US economic docket, which features the release of FOMC meeting minutes and ISM non-manufacturing PMI data on Wednesday, ahead of the keenly watched NFP data during the latter part of the week. 

Technical levels to watch

From current levels, the pair seems more likely to find support around 0.7060-50 region, below which a fresh leg of weakness could drag the pair below Brexit-led swing lows support near 0.7000 psychological mark, towards testing 50-day SMA support near 0.6940 region. On the flip side, strength above 0.7100 handle, leading to a momentum above 0.7130 resistance, has the potential to boost the pair back towards 0.7200 level. A sustained strength above 0.7200 level now seems to open room for further near-term appreciating move for the pair.