The NZD/USD pair came under renewed selling pressure after a minor upward movement in the Asian session to 0.5865. Spot prices are currently holding near the three-week low recorded on Monday, amid broad U.S. dollar strength. On Tuesday, Fed Chair Jerome Powell noted that the central bank would continue to weigh the conflicting effects of high inflation and labor market weakness when making interest rate decisions. This supports the dollar and interrupts its two-day decline. 
In addition, worsening global market sentiment fuels demand for the dollar as a safe-haven currency, putting further pressure on NZD/USD. The New Zealand dollar faces extra challenges from rising expectations of further rate cuts by the Reserve Bank of New Zealand (RBNZ), spurred by disappointing GDP data released last week. Statistics New Zealand reported that the economy contracted by 0.9% in the second quarter, erasing the 0.8% growth of the first quarter and coming in below the expected 0.3% decline. This creates a negative backdrop for the New Zealand dollar.
However, the potential for further dollar gains is limited, as the Fed may cut rates twice before year-end. A positive factor for NZD/USD is the easing of trade tensions between the U.S. and China, which typically supports antipodean currencies, including the New Zealand dollar. Under these conditions, it makes sense to wait for a decisive break below the 200-day Simple Moving Average (SMA) before relying on a continuation of the pair's decline.
The main market focus in the second half of the week will be key U.S. macroeconomic data, which will play a decisive role in the dollar's short-term trajectory and may drive further movement in NZD/USD. On Thursday, the release of final U.S. GDP data and durable goods orders is expected, while Friday will bring the Personal Consumption Expenditures (PCE) index, the Fed's preferred measure of inflation, which will attract close attention from market participants.
From a technical perspective, prices have found solid support at the 200-day SMA, below which bears will decisively defeat bulls. Resistance remains at 0.5870, above which prices may head toward the round level of 0.5900. Oscillators on the daily chart are negative, making it difficult for bulls to secure a stronger position, and the path of least resistance remains to the downside.
The table below shows the percentage change in the U.S. dollar's exchange rate against major currencies today. The dollar showed the greatest strength against the Japanese yen.
