NZD/USD remains below 0.5900 due to dovish sentiment surrounding the RBNZ

• NZD/USD may face challenges as traders expect the RBNZ to deliver a substantial rate cut next week.
• The US Dollar gains ground due to dampened odds of an imminent Fed rate cut.
• Fed's Powell stated, "The economy is not sending any signals that we need to be in a hurry to lower rates."

The NZD/USD pair trades near 0.5890 during the early European session on Tuesday, maintaining its stance amid a softer US Dollar (USD) as profit-taking tempers its recent gains. However, the pair's upside remains capped due to growing expectations of a bumper interest rate cut by the Reserve Bank of New Zealand (RBNZ) next week.

Meanwhile, traders are keeping a close watch on the upcoming Loan Prime Rate (LPR) decision from China, a key trading partner of New Zealand. Market participants anticipate potential additional stimulus measures to bolster economic growth, following the recent 10 trillion Yuan debt package that lacked direct economic stimulus, further intensifying market concerns.

The US Dollar (USD) may appreciate as the Federal Reserve (Fed) Chair Jerome Powell tempered expectations for immediate rate cuts. Powell highlighted the economy's resilience, a strong labor market, and persistent inflationary pressures, stating, "The economy is not sending any signals that we need to be in a hurry to lower rates." Investors are now looking for further guidance from Fed officials later this week on the future path of US interest rates.

Moreover, traders anticipate that the incoming Trump administration will prioritize tax cuts and impose higher tariffs. These measures could fuel inflation, potentially slowing the pace of Fed rate cuts and supporting the US Dollar. Traders are now focused on the upcoming October US Building Permits and Housing Starts data, which is set to be released on Tuesday.