NZD/USD pares gains after weaker NZIER Business Confidence, stays near 0.6040

• NZD/USD faces struggles on contracted business outlook in New Zealand.
• RBNZ is anticipated to maintain cash rates at 5.5% for the sixth consecutive meeting on Wednesday.
• Headline US CPI could show an increase in March while the core measure is anticipated to cool down.

NZD/USD retains its position in positive territory, although it has trimmed some intraday gains, following the release of weaker Business Confidence data from New Zealand on Tuesday. At the time of writing, the pair trades near 0.6040 during the Asian session.

The NZIER Business Confidence (quarter-over-quarter) indicated a 25% contraction in the business outlook in New Zealand for the first quarter of 2024, compared to a 2% decline in the previous quarter. Additionally, the Reserve Bank of New Zealand (RBNZ) is scheduled to hold its monetary policy meeting on Wednesday.

The RBNZ is anticipated to maintain cash rates at 5.5% for the sixth consecutive meeting and emphasize the necessity to remain restrictive for a while longer to curb inflation. In February, the board indicated it would refrain from easing policy until 2025, citing worries about record immigration.

The NZD/USD pair saw gains as risk appetite improved ahead of the upcoming release of Consumer Price Index (CPI) data from the United States (US) scheduled for Wednesday. The CPI report is expected to show an acceleration in headline CPI for March while the core measure is anticipated to cool down. However, the US Dollar (USD) strives to recover its recent losses amidst market volatility.

Support for the US Dollar could stem from remarks by Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari, who emphasized the importance of bringing down the current inflation rate of around 3% to the target level of 2%.