NZD/USD struggles to hold above 0.7000 as USD gathers strength

• NZD/USD lost its traction after staging a modest rebound.
• US Dollar Index closes in on multi-month tops.
• Private sector employment in US rose more than expected in June.

After losing nearly 100 pips in the first two days of the week, the NZD/USD pair staged a modest recovery on Wednesday but struggled to preserve its momentum. As of writing, the pair was virtually unchanged on a daily basis at 0.6988.

Earlier in the day, the kiwi found some demand despite the mixed data from New Zealand. The ANZ Activity Outlook Index improved to 31.6% in June from 29.1% and beat the market expectation of 29.1%. On a negative note, the ANZ Business Confidence Index edged slightly lower to -0.6 from -0.4 in June. 

DXY turns north after ADP data

On the other hand, the Automatic Data Processing (ADP) Research Institute reported that private sector employment in the US increased by 692,000 in June. This print surpassed the market expectation of 600,000 and helped the US Dollar Index (DXY) push higher.

Currently, the DXY is up 0.22% on the day at 92.27 and remains within a touching distance of the multi-month high it set at 92.40 on June 18.

There won't be any other data releases from the US in the remainder of the day and the USD's market valuation is likely to continue to drive NZD/USD's movements. On Thursday, May Building Permits data from New Zealand will be looked upon for fresh impetus.

Technical levels to watch for