NZD/USD reverses a brief dip to 0.6560, 3-week lows

• Disappointing China's CPI and PPI figures bode ill for the Kiwi, a China proxy.
• Sellers extend control on a break of the 0.6600 support amid broad USD demand.
• Focus on US-China trade talks, Powell’s testimony and FOMC minutes.

The NZD/USD pair witnessed aggressive selling last hour and quickly eroded 40-pips after the stops got triggered on a breach of the 0.6600 support. The spot reached the lowest levels in three weeks at 0.6558 before reversing quickly to 0.6590 region, where it now wavers.

The selling pressure in the major accentuated following the release of downbeat Chinese inflation figures, with the Producer Price Index (PPI) missing estimates by a big margin. The Antipodeans are considered as proxies for the Chinese economy, as China is their top exports market.

Moreover, the US dollar keeps its range near three-week tops when compared to its major peers amid looming US-China trade uncertainty and increased odds of a smaller Fed rate cut, in the face of the recent solid US jobs report.

The pair managed to somewhat reverse the brief dip to multi-week troughs, as the bulls were offered some support from a better sentiment towards the risk assets, including the US equity futures, Treasury yields and oil prices.

Attention now turns towards the testimony by the Fed Chair Powell due later today for fresh insights on the US interest rates outlook. Also, of note remains the FOMC June meeting’s minutes that will be published in the American mid-morning.

Levels to watch