NZD/USD retreats from daily highs, clings to modest gains near 0.7060

• NZD/USD closed the previous two days in the positive territory.
• US Dollar Index consolidates Wednesday gains above 92.00.
• Focus shifts to weekly Initial Jobless Claims data from US.

After climbing to its highest level in nearly a month at 0.7089 on Wednesday, the NZD/USD pair lost its momentum but managed to close the second straight day in the positive territory. On Thursday, the pair rose to a daily top of 0.7074 before retreating slightly. As of writing, NZD/USD was up 0.15% on the day at 0.7057.

USD rally loses steam

On Wednesday, the upbeat labour market report from New Zealand provided a boost to the kiwi. On the other hand, the disappointing ADP Employment Change data from the US weighed on the greenback and allowed NZD/USD to preserve its bullish momentum.

Nevertheless, the USD regathered strength after the ISM Services PMI printed a new record high in July. Additionally, hawkish comments from Fed Vice Chair Richard Clarida allowed the greenback to continue to outperform its rivals. Clarida noted that the Fed could announce the beginning of asset tapering later in the year and added that he expects conditions for a rate hike to be met by the end of 2022.

The US Dollar Index, which touched a weekly high of 92.35, is currently consolidating its gains around 92.20. Later in the session, the US Department of Labor's weekly Initial Jobless Claims data from the US will be looked upon for fresh impetus. More importantly, the US Bureau of Labor Statistics will release the July Nonfarm Payrolls data on Friday.

Technical levels to watch for