• 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).