NZD/USD rebounds modestly from weekly lows, stays calm above 0.6850

• AUD sell-off weighs on NZD on Wednesday.
• US Dollar Index ignores data, stays above 96.
• Coming up: Unemployment data from New Zealand.

The NZD/USD pair came under strong selling pressure during the Asian trading hours and slumped to its lowest level in a week at 0.6844 before correcting a small portion of its daily losses in the early NA session. As of writing, the pair was trading at 0.6857, losing 0.5% on a daily basis.

Earlier today, the sharp-fall witnessed in the AUD/USD pair following the RBA Governor Philip Lowe's remarks, who said that the next policy move could be in either direction, weighed on the strongly-correlated NZD/USD pair as well. 

Additionally, the greenback preserves its strength with the US Dollar Index posting gains for the fifth straight and doesn't allow the pair to make a meaningful recovery. Today's data from the U.S. showed that the international trade deficit in November narrowed to $49.3 billion to come in better than the market expectation of $54 billion. Nevertheless, the data was largely ignored by the market participants and the DXY was last seen moving sideways in the upper-half of its daily range near 96.20.

In the Asian session on Thursday, the Statistics New Zealand will release the unemployment rate for the fourth quarter, which is expected to rise to 4.1% from 3.9% recorded in the third quarter. Previewing the report, "Last quarter we saw a large fall, likely reflecting some noise, amidst genuine tightening in the labour market. But while the labour market is in a strong position, we may have seen the best this cycle has to offer,” said Liz Kendall, senior economist at ANZ.

Key technical levels to watch for

The pair could face the first support at 0.6820 (Jan. 30 low) ahead of 0.6785 (50-DMA) and 0.6745 (Jan. 25 low). On the upside, resistances are located at 0.6905 (daily high), 0.6940 (Feb. 2 high) and 0.7000 (psychological level).