• NZD/USD struggles to capitalize on its modest intraday uptick amid renewed USD buying.
• Bets for more RBNZ rate cuts undermine the NZD and further exert pressure on the pair.
• Dovish Fed expectations might cap the upside for the USD and lend support to spot prices.

The NZD/USD pair attracts fresh sellers following a modest Asian session rise to the 0.5865 area and turns lower for the second consecutive day on Wednesday. Spot prices currently trade around mid-0.5800s and remain well within striking distance of a three-week low touched on Monday amid a broadly firmer US Dollar (USD).

US Federal Reserve (Fed) Chair Jerome Powell said on Tuesday that the central bank needs to continue balancing the competing risks of high inflation and a weakening job market in its upcoming rate decisions. This, in turn, assists the USD to gain some positive traction and snap a two-day losing streak. Apart from this, a slight deterioration in the global risk sentiment benefits the safe-haven Greenback, which is seen as a key factor exerting downward pressure on the NZD/USD pair.

The New Zealand Dollar (NZD), on the other hand, is further weighed down by rising bets for more interest rate cuts by the Reserve Bank of New Zealand (RBNZ), bolstered by the disappointing GDP print released last week. Statistics New Zealand reported that the economy contracted by 0.9% QoQ in the second quarter, reversing a 0.8% rise recorded during the March quarter and missing estimates for a 0.3% drop. This contributes to the offered tone surrounding the NZD/USD pair.

The upside for the USD, however, seems limited in the wake of the growing acceptance that the US central bank will lower borrowing costs twice by the end of this year. Furthermore, easing US-China trade tensions, which tends to benefit antipodean currencies, including the Kiwi, could offer some support to the NZD/USD pair. This makes it prudent to wait for a convincing break below the 200-day Simple Moving Average (SMA) support before positioning for any further losses for the pair.

The market focus now shifts to important US macro releases, scheduled during the latter part of the week, which will play a key role in influencing the near-term USD price dynamics and provide a fresh impetus to the NZD/USD pair. The final US GDP print, along with Durable Goods Orders, will be published on Thursday, followed by the US Personal Consumption Expenditure (PCE) Price Index on Friday. The latter is considered the Fed's preferred inflation gauge and should grab all the attention.