NZD/USD climbs higher toward 0.6700 as USD selloff continues

• US Dollar Index falls toward 96.50 area on Monday.
• Sour market mood keeps risk-sensitive currencies' gains in check.
• Coming up: Markit Services PMI and Composite PMI data from US.

The NZD/USD pair registered modest losses last week and opened with a small bearish gap before gaining traction in the early trading hours of the European session. As of writing, the pair was up 0.17% on the day at 0.6673.

The lack of significant macroeconomic data releases from New Zealand allowed the pair to remain calm during the first half of the day. With the greenback coming under selling pressure, however, the pair turned north and reached a session high of 0.6676.

USD fails to build on last week's gains

After gaining more than 0.5% in the second half of the week, the US Dollar Index started the new week on the back foot and was last down 0.3% on the day at 99.58. Later in the day, the IHS Markit will release the Services PMI and the Composite PMI data from the US. 

Despite the broad selling pressure surrounding the USD, the pair may have a tough time stretching higher as the heightened geopolitical tensions in the Middle East could keep risk-sensitive currencies' gain, such as the NZD, in check. Reflecting the risk-off atmosphere, Euro Stoxx 50, Germany's DAX and the UK's FTSE are all losing more than 1% on the day.

On Tuesday, the NZIER Business Confidence from New Zealand will be watched closely by the participants as well.

Technical levels to watch for