NZD/USD rebounds to 0.7000 area in choppy session

• NZD/USD is posting small daily gains around 0.7000.
• US Dollar Index continues to move sideways below 93.00.
• Wall Street's main indexes look to open in the negative territory.

After closing the previous week deep in the negative territory, the NZD/USD pair faced modest bearish pressure during the Asian session on Monday and dropped to a daily low of 0.6972. With the market mood improving during the European session, however, the pair erased its losses and was last seen posing small gains at 0.7002.

Eyes on Wall Street

At the start of the new week, the US Dollar Index (DXY) continues to fluctuate in a tight range below 93.00 as investors await the next significant catalyst. Although major European equity indexes post modest losses on Monday, US stock index futures push lower with financial stocks suffering heavy losses following the liquidation of a large hedge fund, Archegos Capital.

Currently, the Dow Futures and the S&P 500 Futures both lose around 0.5%, suggesting that risk flows could start dominating financial markets in the second half of the day and help the USD find demand.

On the other hand, the benchmark 10-year US Treasury bond yield is down more than 1%, limiting the DXY's upside for the time being. 

The Federal Reserve Bank of Dallas' Manufacturing Business Index will be the only data featured in the US economic docket on Monday. On Tuesday, February Building Permits will be released from New Zealand. Nevertheless, the market reaction is likely to be muted to these data.

Technical levels to watch for