NZD/USD holds steady around 0.6150 following an improved Business NZ PSI

• NZD/USD holds ground following the release of an improved Business NZ Performance of Services Index on Monday.
• The Business NZ PSI rose to 45.5 in August from 45.2 in July, reaching its highest level since April.
• The US Dollar receives downward pressure amid uncertainty over the scale of the Fed's upcoming rate cut.

NZD/USD holds its position following the recent losses from the previous session, trading around 0.6160 during the Asian hours on Monday. Traders are digesting data showing a slight improvement in business activity in New Zealand.

The Business NZ PSI increased to 45.5 in August from 45.2 in July, marking its second consecutive monthly rise and reaching its highest level since April, although it remains in contraction territory.

The New Zealand Dollar (NZD) may struggle due to increasing speculation that the Reserve Bank of New Zealand (RBNZ) will implement aggressive interest rate cuts. After unexpectedly beginning its policy-easing cycle in August, the RBNZ is anticipated to reduce its Official Cash Rate (OCR) at each of its remaining policy meetings for the year.

Traders are expected to await New Zealand's Gross Domestic Product (GDP) data for the second quarter, scheduled for later in the week, to gain further insights into the Reserve Bank of New Zealand's monetary policy outlook.

Investors are closely watching the upcoming policy decision from the US Federal Reserve (Fed) later this week. The market is divided on whether the Fed will implement a rate cut of 25 basis points (bps) or 50 bps.

According to the CME FedWatch Tool, markets anticipate 48.0% odds of a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. The likelihood of a 50 bps rate cut has increased to 52.0%, up from 50.0% a day ago.

Traders will closely watch the FOMC Press Conference for insights into the future of US interest rates. If Fed Chair Jerome Powell signals a more aggressive easing approach, it could put downward pressure on the US Dollar, providing a potential boost to the NZD/USD pair.