NZD/USD struggles for a firm direction, stuck in a range around 0.6300 mark

• NZD/USD struggled to gain any meaningful traction and oscillated in a familiar trading range.
• The cautious mood acted as a headwind for the risk-sensitive kiwi amid a modest USD uptick.
• Reduced bets for more aggressive Fed rate hikes might cap the USD and lend some support.

The NZD/USD pair extended its sideways price moves for the second straight day on Tuesday and remained confined in a range around the 0.6300 mark heading into the European session.

Despite hopes that inflation might be nearing its peak, investors remain concerned that rapidly rising interest rates and tighter financial conditions would pose challenges to global economic growth. This was evident from the prevalent cautious mood around the equity markets, which, in turn, acted as a headwind for the risk-sensitive kiwi.

The downside, however, remains cushioned, at least for the time being, amid subdued US dollar demand. The recent decline in commodity prices has eased concerns about the persistent rise in inflationary pressures. Apart from this, recession fears forced investors to trim their bets for more aggressive Fed rate hikes and undermined the USD.

The mixed fundamental backdrop, so far, has failed to assist the NZD/USD pair to gain any meaningful traction. Even from a technical perspective, spot prices have been oscillating in a familiar trading range over the past two weeks or so, which further makes it prudent to wait for a sustained move in either direction before placing fresh bets.

Market participants now look forward to the US economic docket, featuring the release of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index later during the early North American session. This, along with the US bond yields and the broader risk sentiment, will influence the USD and provide some impetus to the NZD/USD pair.

The focus, however, will remain glued to Fed Chair Jerome Powell's appearance on Thursday. Investors will look for fresh clues about the US central bank's policy tightening path. This will play a key role in driving the near-term USD demand and help determine the next leg of a directional move for the NZD/USD pair.

Technical levels to watch