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The NZD/USD pair starts the new week with a downward bias, gradually moving away from Friday's more than one-week high, although no active selling is observed yet, due to mixed fundamental factors. At present, the pair is holding near the 0.5940 level.
The main source of uncertainty remains the situation with the U.S.–China trade truce, which expires on August 12. This factor is limiting the rise of currencies that typically move inversely to the yuan, including the New Zealand dollar. Nevertheless, investors remain hopeful for a positive outcome, and combined with the overall positive performance of equity markets, this continues to support demand for risk assets, benefiting the New Zealand dollar.
Many market participants believe the Federal Reserve will resume its rate-cut cycle as early as September and will lower rates at least twice by 25 basis points each before year-end. These expectations are reinforced by the July Nonfarm Payrolls report, which showed a deterioration in U.S. labor market conditions, as well as recent comments from key FOMC members. As a result, the U.S. dollar was unable to capitalize on Friday's modest rebound from a two-week low and remains under pressure, which is helping to limit the downside in NZD/USD.
Even so, traders should proceed with caution, preferring to wait for the release of key U.S. inflation data — the Consumer Price Index on Tuesday and the Producer Price Index on Thursday. In addition, bilateral talks between the U.S. and Russia on ending the conflict in Ukraine, scheduled for Friday, will be of significant importance. These events could have a substantial impact on overall risk sentiment and set the tone for NZD/USD's direction.
From a technical perspective, oscillators on the daily chart remain in negative territory, and NZD/USD is under pressure. The pair has found support at the 0.5940 level. The next support lies at the 100-day SMA; a move below it would indicate that the bulls have lost the strength to defend their positions. The nearest resistance is at 0.5975, and if the pair breaks above it, it could easily reach the 0.6000 round level.
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