NZD/USD struggles to pull away from 0.66 as Trump continues to spook investors

• U.S.-China trade conflict takes a turn for the worse.
• The risk-off mood weighs on the antipodeans.
• US Dollar Index continues to float above 97.50.

The NZD/USD pair started the day with a large bearish gap as kiwi came under heavy selling pressure following President Trump's tweets about the trade conflict with China over the weekend. After testing the 0.66 mark in the early Asian trading hours, the pair has moved into a consolidation stage and was last seen losing 0.45% on the day at 0.6612.

Trump on Sunday announced, via Twitter, that the tariff rate on Chinese imports will go up to 25% on Friday and voiced his frustration about the lack of progress in trade talks, saying that they will not renegotiate the deal despite China's desire to do so. Assessing Trump's remarks and China's response, "The US wants to be able to punish China with renewal of tariffs if China does not live up to their side of the deal. China does, according to press statements, not accept a one sided mechanism in which it is not allowed to retaliate tariff hike by the US,” ING analysts said and called Trump's tweets a "negotiation strategy."

Meanwhile, the risk-off mood helps the greenback find demand on Monday and investors will be keeping a close eye on Wall Street's reaction. At the moment, the S&P 500 Futures is down more than 1.5% on the day, suggesting that major equity indexes in the U.S. are likely to start the day in the negative territory.

There won't be any macroeconomic data releases from New Zealand on Tuesday. However, the RBA will release its policy statement and a sharp reaction witnessed in the AUD could impact the strongly-correlated kiwi's market valuation.

Technical levels