NZD/USD clings to modest recovery gains above 0.6400

• Upbeat market mood helps NZD gather strength on Wednesday.
• US Dollar Index stays near mid-99s after Tuesday's upsurge.
• Coming up: FOMC meeting minutes and speeches by Fed officials.

The NZD/USD pair erased more than 40 pips on Tuesday but staged a modest recovery during the first half of the day on Wednesday in tandem with Asian equity indexes. Although the latest headlines surrounding the coronavirus outbreak don't necessarily point to a convincing positive development, Beijing's commitment to stimulate the economy provided a boost to the sentiment.

After advancing to a fresh daily high of 0.6411, however, the pair erased a small portion of its daily gains and was last seen trading at 0.6403.

Focus shifts to FOMC minutes

The broad USD strength seems to be making it difficult for the pair to preserve its bullish momentum. At the moment, the US Dollar Index is at its highest level in more than four months at 99.48, adding 0.03% on a daily basis. In the second half of the day, Producer Price Index (PPI), Housing Starts and Building Permits data will be featured in the US economic docket.

More importantly, the FOMC will publish the minutes of its latest monetary policy meeting at 19:00 GMT. Previewing this event, “minutes are unlikely to include any major new revelations on the near-term outlook relative to what was said in the press briefing and (Powell's) testimony," said TD Securities analysts. "However, they will likely include an update on the review being conducted by the Fed."

Technical levels to consider