The New Zealand dollar regained some ground on Tuesday against the Australian dollar, which was hammered lower after surprisingly soft consumer inflation data.
The aussie slipped about half a US cent on the release of figures showing annual core inflation of 2.2 per cent in the December quarter.
That was less than the 2.6 per cent expected and near the bottom of the Reserve Bank of Australia's 2-3 per cent target band.
The data added to perceptions that the bank will not raise interest rates from the current 4.75 per cent until later in the year.
That echoes expectations about New Zealand's central bank, which releases its decision on interest rates on Thursday morning.
The market is tipping a July rate rise, given the soft state of the economy.
By 5pm local time, the kiwi was at A76.93c, recovering from an earlier two-week low around A76.30c and above A76.80c late on Monday afternoon.
The NZ dollar also recovered against the euro, having fallen to a five-week low around 0.555 on Monday morning.
It was trading at 0.5602 euro late on Tuesday, up from 0.5581 on Monday.
The currency was higher against the greenback, at US76.49c from Monday's US75.90c, boosted overnight by rallying equity markets.
The kiwi rose to 63.10 yen, from 62.80 yen, and to 47.82p from 47.53p against the pound.
The euro has recovered about six per cent in a two-week rally, benefiting most recently from expectations of a rate rise from the European Central Bank, ahead of the US Federal Reserve, following comments from ECB head Jean Claude Trichet about inflation pressures.
Demand from Asian central banks has generally supported the euro in its recent rally, which followed sharp declines on concerns about growing sovereign debt problems in Europe.
