• NZD/USD snaps a five-day losing streak to over a one-month low amid a modest USD pullback.
• The Fed’s hawkish outlook should act as a tailwind for the USD and cap the upside for the pair.
• Traders now look forward to the release of the US PCE Price Index for short-term opportunities.

The NZD/USD pair gains strong positive traction during the Asian session on Thursday and for now, seems to have snapped a five-day losing streak to sub-0.5900 levels, or over a one-month low touched the previous day. The intraday move up lifts spot prices to the 0.5925-0.5930 region in the last hour and is sponsored by a softer US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, retreats slightly from a two-month top touched in reaction to the Federal Reserve's (Fed) hawkish tone on Wednesday. In fact, Fed Chair Jerome Powell showed no preference for cutting rates at the next policy meeting in September. The USD bulls, however, refrain from placing fresh bets and opt to wait for the release of the US Personal Consumption Expenditure (PCE) Price Index later during the North American session.

In the meantime, a generally positive tone around the equity markets is seen undermining the safe-haven buck and benefiting the risk-sensitive Kiwi. However, the disappointing release of China's official Manufacturing PMI and unimpressive Services PMI for July could act as a headwind for antipodean currencies, including the New Zealand Dollar (NZD). Apart from this, the uncertainty over the extension of the US-China trade truce might contribute to capping the upside for the NZD/USD pair.

Top officials from the US and China ended two days of what both sides described as constructive talks. That said, US Treasury Secretary Scott Bessent said that any extension of the 90-day tariff truce, which is set to expire next month, would be up to President Donald Trump. This, in turn, makes it prudent to wait for strong follow-through buying before confirming that the NZD/USD pair has bottomed out in the near-term and positioning for any meaningful appreciating move.