NZD/USD clings to gains near multi-week peak, comfortably above 0.6100 mark

• NZD/USD attracts buyers for the third straight day and climbs to a multi-week top on Tuesday.
• The strong move-up could be attributed to some technical buying above the key 200-day SMA.
• A modest USD recovery might cap gains ahead of the FOMC meeting minutes on Wednesday.

The NZD/USD pair builds on the overnight breakout momentum through the very important 200-day Simple Moving Average (SMA) and scales higher for the third successive day on Tuesday. Spot prices advance to a nearly six-week peak, around the 0.6130-0.6135 region during the early part of the European session, though might struggle to capitalize on the positive move. 

As investors look past the Reserve Bank of New Zealand's (RBNZ) dovish tilt last week, the risk-on mood and optimism over a possible economic stimulus from China's government act as a tailwind for antipodean currencies, including the Kiwi. The US Dollar (USD), on the other hand, dropped to its lowest level since January amid bets for an imminent start of the Federal Reserve's (Fed) rate-cutting cycle in September. This turns out to be another factor pushing the NZD/USD pair higher.

In fact, the markets are now pricing in the possibility that the Fed will lower borrowing costs by over 200 basis points by the end of 2025 and the bets were reaffirmed by the recent comments from influential FOMC members. The USD bears, however, seem reluctant and prefer to wait for more cues about the Fed's policy path in the near term. Apart from this, geopolitical risks help ease the bearish pressure surrounding the safe-haven buck and might cap the upside for the NZD/USD pair. 

Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Tuesday. Hence, the USD price dynamics will continue to play a key role in driving the currency pair. Meanwhile, the focus remains on the release of the FOMC meeting minutes on Wednesday, which, along with Fed Chair Jerome Powell's speech on Friday, should provide some meaningful impetus to the buck. This, in turn, will help determine the near-term trajectory for the NZD/USD pair.