• NZD/USD is having a difficult time finding direction on Wednesday.
• CPI in New Zealand rose modestly in the first quarter.
• US Dollar Index clings to modest recovery gains.

The NZD/USD pair advanced to a monthly high of 0.7230 on Tuesday but made a sharp U-turn to close the day in the negative territory. With the trading action turning subdued amid a lack of significant fundamental drivers on Wednesday, the pair staged a correction and was last seen posting small daily gains at 0.7180.

NZD ignores CPI figures

The negative shift witnessed in risk sentiment helped the greenback find demand on Tuesday and forced NZD/USD to turn south in the second half of the day.

During the Asian session, the data from New Zealand revealed inflation, as measured by the Consumer Price Index (CPI), edged higher to 1.5% on a yearly basis in the first quarter from 1.4%. Although this reading came in slightly higher than the market expectation of 1.4%, it failed to trigger a noticeable market reaction.

On the other hand, the US Dollar Index extends its rebound into a second straight day on Wednesday and keeps NZD/USD's upside limited.

There won't be any data releases featured in the US economic docket and investors will keep a close eye on Wall Street's main indexes. Currently, the S&P 500 Futures are down 0.2% and the USD is likely to preserve its strength in case safe-haven flows dominate the financial markets in the second half of the day.

Technical levels to watch for