• The NZD/USD pair remains under some selling pressure for the fourth consecutive day on Tuesday.
• The USD is regaining positive momentum amid the Fed’s hawkish stance, which is weighing on the pair.
• Concerns about economic recovery in China additionally contribute to the moderate decline.

NZD/USD is looking to capitalize on the previous day’s modest rebound from the 0.6100 level, a one-week low, and is trading with a bland negative bias during Tuesday’s Asian session. Spot prices remain capped within the familiar range of the last month or so and are currently hovering around 0.6120, down almost 0.20% on the day as recent purchases in United States Dollars (USD) emerge.

Against the backdrop of the Federal Reserve’s (Fed) hawkish outlook, policymakers continue to favor just one rate cut this year. In fact, Philadelphia Fed President Patrick Harker said Monday that keeping interest rates at current levels for a little longer will facilitate lower inflation and mitigate growth risks. This continues to support elevated US Treasury yields and helps the US Dollar regain some positive strength, which in turn weighs on the NZD/USD pair.

Additionally, mixed economic data released from China on Monday highlighted a piercing recovery in the world’s second-largest economy and proved to be another factor weakening antipodean currencies, including the kiwi. Meanwhile, weaker U.S. consumer and producer prices suggest inflation is falling, keeping alive hopes for the Fed’s first rate cut in September and another in December. This could limit dollar gains and provide some support to the NZD/USD pair.

Market participants are now eagerly awaiting the US economic report, which includes the release of monthly retail sales and industrial production data. In addition, speeches by influential FOMC members and US bond yields will drive demand for USD, which in turn should provide a significant boost to the NZD/USD pair. Investors can further take cues from broader market risk sentiment to take advantage of short-term opportunities around the risk-sensitive New Zealand Dollar (NZD).