Ella 
NZD/USD fell for a second straight day on Tuesday, falling to a one-week low near 0.6100 during the Asian session. However, after the US dollar (USD) retreated slightly, spot prices recovered a few points from the daily lows and are currently trading around 0.6165, down just over 0.10% for the day.
The U.S. Dollar Index (DXY), which tracks the greenback against a basket of currencies, remains subdued amid a fresh decline in U.S. Treasury yields, limiting downside for NZD/USD. However, any meaningful decline in the dollar still seems elusive, as investors now appear to believe that the Federal Reserve (Fed) will keep interest rates higher for longer, amid persistently higher inflation and a still-viable U.S. economy.
The Fed’s hawkish outlook should act as a “headwind” for US bond yields and the US dollar, so caution should be exercised before NZD/USD resumes its strong rally of the past two weeks or so from sub-0.6100 levels. Traders may prefer to wait and see ahead of the key central bank risk event – the Reserve Bank of New Zealand’s (RBNZ) policy decision due out on Wednesday.
Meanwhile, traders will take cues from U.S. macro data on Tuesday – durable goods orders, Conference Board consumer confidence and the Richmond manufacturing index. However, market focus will remain on Thursday’s U.S. personal consumption expenditures (PCE) price index, which should influence future policy decisions by the Federal Reserve. This, in turn, will provide fresh impetus to USD and NZD/USD.
