NZD/USD pares early gains, turns flat near 0.6630

• Hopes of further progress in US-China trade talks boost sentiment on Monday.
• US Dollar Index reclaims 97.50 following Friday's correction.
• Coming up: NZIER Business Confidence data from New Zealand.

The NZD/USD pair started the new week on a positive note with the China proxy gathering strength on hopes of the US and China making further progress in trade talks. However, with the greenback gathering strength during the European trading hours, the NZD/USD pair erased its early gains and was last seen trading at 0.6630, where it was virtually unchanged on the day.

Eyes on US-China phase-one trade deal

Later this week, the US and China are expected to sign the phase-one of the trade deal. Commenting on the deal, US Treasury Secretary Mnuchin said the agreement was "very extensive" and noted that the phase-two trade talks will start soon. In the meantime, the Wall Street Journal reported that the US and China have agreed to hold semi-annual talks with an aim to implement reforms and resolve disputes.

Previewing this event, “US Treasury Secretary Steven Mnuchin said over the weekend that an English-language version of the agreement will be released this week," said Deutsche Bank analysts. "It’s quite remarkable that we still don’t know much in the way of details so eyes will be on this. We’ll also see the start of US earnings season with a number of banks reporting."

On the other hand, after starting the day in a calm manner and moving sideways in the 97.30-97.40 region, the US Dollar Index gained traction in the last hours and was last up 0.16% on the day at 97.50. A sharp drop witnessed in the GBP/USD pair following disappointing GDP data releases from the UK seems to be helping the USD find demand during the European trading hours.

There won't be any macroeconomic data releases featured in the US economic docket on Monday. During the Asian session on Tuesday, the NZIER Business Confidence data from New Zealand will be looked upon for fresh impetus.

Technical levels to watch for