NZD/USD steadies around 0.7000 as USD struggles to find demand

• NZD/USD staged a rebound after dropping to 0.6950 area.
• US Dollar Index looks to end the day in the negative territory.
• Focus shifts to Tuesday's data releases from US ahead of FOMC meeting.

The NZD/USD pair started the new week on the back foot and declined to 0.6950 before regaining its traction. As of writing, the pair was up 0.4% on a daily basis at 0.7000.

Earlier in the day, the disappointing data from New Zealand weighed on the kiwi. Statistics New Zealand reported in the Asian session that the monthly trade surplus narrowed to NZD261 million in June from NZD489 million in May.

DXY on track to close in the red

Nevertheless, the renewed USD weakness helped NZD/USD reverse its direction in the second half of the day. The US Dollar Index, which registered modest gains last week, turned south amid declining US Treasury bond yields during the American trading hours. The only data from the US revealed that New Home Sales declined by 6.6% in June, missing the market expectation for an increase of 3.5%.

On Tuesday, the Conference Board's Consumer Confidence Index data for July and June Durable Goods Orders will be featured in the US economic docket. Nevertheless, the market reaction is expected to remain subdued as investors are likely to remain on the sidelines ahead of FOMC's monetary policy decisions on Wednesday.

On Thursday, the US Bureau of Economic Analysis will release its first estimate of the annualized GDP growth for the second quarter.

Technical levels to watch for