At present, NZD/USD is demonstrating moderate activity and attracting buyers. However, a strong continuation of the upward movement has yet to materialize, as the market remains within its familiar weekly range.

The US dollar continues to struggle to attract buying interest, staying near a three-year low. This three-year low acts as a key support factor for the NZD/USD pair, as dollar weakness supports the appreciation of the New Zealand dollar.

Market participants are factoring in the possibility of the Federal Reserve resuming its rate-cutting cycle in September due to signs of economic slowdown and declining inflation. Meanwhile, uncertainty over US trade relations and fiscal issues keeps dollar bulls in a defensive stance.

The New Zealand dollar is receiving support from domestic data: the food price index rose from 3.8% in April to 4.4% last month — the highest level since December 2023. This data aligns with expectations of further interest rate cuts by the Reserve Bank of New Zealand (RBNZ), which provides additional backing for the pair.

Nonetheless, traders are showing caution ahead of key central bank events and are refraining from opening new aggressive positions.

The Fed's rate decision is expected on Wednesday; current policy is likely to be maintained, with potential comments on the future path of rate cuts. Traders should pay close attention to Chair Jerome Powell's remarks during the press conference.

Today's important US retail sales data could provide an additional impulse later during the North American session.

On a broader scale, ongoing geopolitical tensions in the Middle East are introducing risk aversion, prompting investors to seek safe havens — thus limiting gains for risk-sensitive currencies such as the New Zealand dollar (NZD).

From a technical standpoint, NZD/USD remains on an upward trajectory, with daily chart oscillators holding in positive territory and far from overbought levels, supporting a bullish outlook.