NZD/USD edges lower toward 0.66 as USD preserves strength

• The bearish pressure on NZD/USD remains intact on Monday.
• US Dollar Index clings to gains above 98 mark.  
• US-China trade negotiations and FOMC meeting to highlight the week.

The NZD/USD pair lost 130 pips last week and erased all the gains it posted in the previous two weeks. With the USD preserving the momentum it gathered on the back of last Friday’s upbeat GDP data, which came in at 2.1% on a yearly basis in the second quarter to beat the market expectation of 1.8%, the pair continued  to push lower on Monday and touched its lowest level in 20-days at 0.6618. As of writing, the pair was trading a couple of pips above that level, erasing 0.2% on the day.

Although US Treasury Secretary Mnuchin last week said that they were not expecting to have a breakthrough in this week’s high-level trade talks in China, markets will be paying close attention to trade-related headlines and any development that points to progress in negotiations could help antipodeans gain traction. Talks will be reportedly taking place on Tuesday and Wednesday.

USD stays strong ahead of Fed

Meanwhile, ahead of FOMC’s policy announcements on Wednesday, the USD takes advantage of the selling wave that hit major European currencies today, lifting the US Dollar Index to its highest level in nearly two months above 98.

Later in the session, the Federal Reserve Bank of Dallas is scheduled to release its Manufacturing Index but is not expected to have a notable impact on the market action.  

During the Asian trading hours on Tuesday, the ANZ Activity Outlook and the ANZ Business Confidence, which are both seen improving in July, will be looked upon for fresh impetus.

Technical levels to watch for