NZD/USD sticks to gains near one-month top amid weaker USD, remains below 200-day SMA

• NZD/USD advances to a multi-week top, albeit struggles to break through the 200-day SMA. 
• Fed rate cut bets continue to undermine the USD and remain supportive of the positive move.
• The RBNZ’s dovish tilt keeps a lid on further gains amid worries about a slowdown in China.

The NZD/USD pair attracts some follow-through buying for the second straight day on Monday and climbs to over a one-month peak amid sustained US Dollar (USD) selling. Spot prices, however, struggle to make it through the very important 200-day Simple Moving Average (SMA) resistance and trade around the 0.6070 area during the first half of the European session, still up over 0.35% for the day. 

The US Producer Price Index (PPI) and Consumer Price Index (CPI) released last week indicated that inflation is on a downward trend, reaffirming market bets that the Federal Reserve (Fed) will begin its rate-cutting cycle in September. This, in turn, triggers a fresh leg down in the US Treasury bond yields and drags the USD Index (DXY), which tracks the Greenback against a basket of currencies, to its lowest level since January. Apart from this, a stable performance across the global equity markets turns out to be another factor undermining the safe-haven buck and benefiting the risk-sensitive Kiwi.

That said, the Reserve Bank of New Zealand's (RBNZ) dovish tilt last week holds back bulls from placing aggressive bets and keeps a lid on any further gains. In fact, the central bank unexpectedly decided to cut the Official Cash Rate (OCR) for the first time since March 2020, citing the recent progress towards meeting the annual inflation target and weak domestic economic growth. The RBNZ also indicated more cuts over the coming months, which, along with concerns about an economic downturn in China, acts as a headwind for antipodean currencies, including the New Zealand Dollar (NZD).

Investors also seem reluctant and prefer to wait for more cues about the Fed's policy path before positioning for the next leg of a directional move. Hence, the focus remains glued to the release of the FOMC meeting minutes on Wednesday and Fed Chair Jerome Powell's speech at the Jackson Hole Symposium on Friday. Apart from this, New Zealand's quarterly Retail Sales data, due on Friday, will help determine the near-term trajectory for the NZD/USD pair. In the meantime, the USD price dynamics might continue to drive spot prices in the absence of relevant  macro data on Monday.