NZD/USD edges lower toward 0.66 mark

• US Dollar Index sticks to modest gains above the 95 handle.
• Trading volume thins out in the second half of the day.

The NZD/USD pair eased below the 0.66 mark and touched its lowest level since August 17 at 0.6592 earlier in the Asian session before staging a modest recovery during the European trading hours. After rising to 0.6620, the pair failed to preserve its momentum and was last seen trading at 0.6605, where it was down 0.25% on the day.

In the absence of major fundamental drivers, the pair's price action on Monday remains technical. In the meantime, the US Dollar Index, which started the week with a small bullish gap, sticks to small gains above the 95 mark and is struggling to determine its next short-term direction. In the remainder of the day, the pair is likely to stay in its range with NA traders enjoying the long Labor Day weekend.

The data released by the Statistics New Zealand on Monday showed that the Terms of Trade Index improved to 0.6% in the second quarter from -2% in the first quarter but fell short of the market expectation of 1%. On Tuesday, the bi-weekly GDT auction will be watched closely by the participants. Tomorrow's economic docket in the U.S. will feature IBD/TIPP Economic Optimism Index and the ISM and Markit Manufacturing PMI figures.

Technical outlook

The RSI indicator on the daily chart stays below the 50 mark, suggesting that sellers are still in control of the price action. The initial support aligns at 0.6590 (daily low) ahead of 0.6545 (Aug. 15 low) and 0.6500 (psychological level). On the upside, resistances are located at 0.6660 (Aug. 31 high), 0.6715 (50-DMA) and 0.6815 (100-DMA).