NZDUSD is negative below 0.5900 despite the introduction of USD buying

Following a modest bearish gap opening to the 0.5855-0.5850 range on Monday, the NZDUSD pair experiences some buying, but is unable to capitalize on the move. Spot prices retreat a few pips from the day's high and continue on the defensive below the 0.5900 mark as the US Dollar recovers minor territory at the start of the European session.

On the first day of the new week, the USD regains some upward momentum and recovers a bit of Friday's fall following the announcement of the NFP. In fact, the monthly US jobs report's mixed results fueled rumors that the Federal Reserve may slow the pace of future rate hikes, which weighed heavily on the US dollar. Nonetheless, higher US Treasury bond yields and a softer tone help limit dollar losses and act as a drag for the NZDUSD pair.

Concerns of headwinds stemming from China's intention to maintain its economically harmful zero-COVID policy have weakened investor confidence. This occurs in the midst of the protracted Russia-Ukraine conflict and leads to escalating fears regarding the worsening global economic crisis. Even from a technical perspective, bullish traders should be mindful of the emergence of fresh selling ahead of the middle of the 0.59 range. Before positioning for any significant NZDUSD pair gain, it is prudent to await sufficient follow-through buying.

The United States is not anticipated to release any market-moving economic data, leaving the USD vulnerable to US bond yields. Aside from this, traders will take cues from the overall risk sentiment of the market in order to capitalize on short-term opportunities involving the risk-sensitive New Zealand dollar. However, the mixed underlying environment may cause short-term traders to remain on the sidelines until the release of the latest US consumer inflation data on Thursday.