NZD/USD climbs higher toward 0.6700 on unabated USD selloff

• NZD/USD starts new week on strong footing, closes in on 0.6700.
• US Dollar Index extends slide, drops below 94.00.
• Durable Goods Orders and Dallas Fed Manufacturing Index will be releases on Monday.

The NZD/USD pair gained nearly 100 pips last week and started the new week on a positive note. After advancing above 0.6670 during the Asian session, the pair stayed relatively quiet during the European morning but gained traction in the last hour. As of writing, NZD/USD was up 0.5% on the day at 0.6677.

DXY slumps below 94.00

Although the escalating tensions between the US and China continue to weigh on the sentiment, the heavy selling pressure surrounding the greenback allows NZD/USD to stay bearish. The sharp drop witnessed in the US Treasury bond yields seems to be the primary reason behind the broad USD weakness.

At the moment, the 10-year T-bond yield is down nearly 3% on the day and the US Dollar Index (DXY) is at its lowest level since early July of 2018 at 93.77, down 0.6% on the day.

Meanwhile, market sentiment remains mixed on Monday with major European equity indexes trading little changed on the day. On the other hand, the S&P 500 futures are up 0.52%, suggesting that the USD selloff could soften in the second half of the day if rising US stocks help T-bond yields stage a rebound.

Later in the day, Durable Goods Orders and the Federal Reserve Bank of Dallas’ Texas Manufacturing Outlook Survey will be featured in the US economic docket. In the early trading hours of the Asian session on Tuesday, Statistics New Zealand will release the Total Filled Jobs data for June.

Technical levels to watch for