NZD/USD slumps below 0.6600 as USD recovery gathers momentum

• NZD/USD fell to its lowest level in nearly two weeks on Monday.
• Broad-based USD strength keeps the bearish pressure intact.
• US Dollar Index climbs to 94.00 area ahead of PMI data.

The NZD/USD pair came under heavy bearish pressure in the early trading hours of the American session as the USD continues to gather strength against its rivals. As of writing, the pair was trading at its lowest level since July 21st at 0.6598, losing 0.52% on a daily basis.

Broad-based USD strength weighs on NZD/USD

The US Dollar Index (DXY), which posted weekly losses for the fifth straight time last week, gained traction to start the week and was last seen gaining 0.53% on the day at 93.95.

The sharp upsurge witnessed in the US Treasury bond yields seems to be helping the USD find demand in the absence of significant fundamental drivers. At the moment, the 10-year US T-bond yield is up 6.12% on the day at 0.567%.

Later in the session, the IHS Markit’s final reading of July’s Manufacturing PMI and the ISM’s Manufacturing PMI from the US will be looked upon for fresh impetus. With the DXY showing a strong positive correlation with US T-bond yields, an upbeat reading could help the index extend its daily rebound.

There won’t be any macroeconomic data releases from New Zealand on Tuesday and the USD’s market valuation is likely to remain the primary driver of the pair’s movements.

Technical levels to watch for