• High-level US-China trade talks to kick off on Tuesday.
• US Dollar Index clings to modest daily gains above 98.
• Coming up: Building Permits data from New Zealand.

Ahead of this week's key macroeconomic events, the NZD/USD pair posting modest losses and is looking to close the eighth straight trading day in the negative territory. As of writing, the pair was down 0.1% on the day at 0.6627.

Following last Friday's rally that was triggered by the US Bureau of Economic Analysis' first estimate of the second-quarter GDP, which showed a 2.1% expansion to beat the market expectation of 1.8%, the US Dollar Index inched higher but seems to be having a difficult time preserving its momentum as investors move to the sidelines while waiting for the FOMC announcements on Wednesday. Nevertheless, the US Dollar Index stays a little above the 98 handle, adding 0.15% on the day.

FOMC meeting and US-China trade talks to ramp up volatility

Previewing the FOMC meeting, "Given the dovish signalling from officials, the weakness in forward-looking indicators (particularly for manufacturing), and the persistence of downside risks to the outlook, we think a 25bp cut is a done deal," said ABN AMRO senior economist Bill Diviney. "However, even the most dovish members of the committee (such as St Louis Fed President James Bullard) have expressed scepticism over a 50bp cut, so such an aggressive move looks unlikely."

Investors will also be looking for headlines coming out of the first round of US-China high-level trade talks after G20 summit that will start on Tuesday and go on for two days. Although no breakthrough is expected, antipodeans such as the NZD and the AUD are likely to react positively to any signs of progress and vice versa. Meanwhile, Building Permits from New Zealand will be published during the early hours of the Asian session on Tuesday but should be ignored by the market participants.

Technical levels to watch for