NZD/USD returns below 0.6000 as the US Dollar bounces up

• The New Zealand Dollar is pulling back from 0.6030 amid a stronger US Dollar.
• The Greenback trims losses with fears about a US debt crisis looming.
• Market expectations of a dovish cut by the RBNZ are weighing on the Kiwi.
  

The New Zealand Dollar failed to break the Year-to-Date high at 0.6030 and is trading lower on Tuesday, weighed by a somewhat stronger US Dollar and market expectations that the RBNZ will ease its monetary policy further on Wednesday.

The Dollar Index is trading higher on Tuesday with US markets coming back from a long weekend and investors relieved by Trump's decision to delay the deadline for a trade deal with the EU until July 9.

tariff

The US president backed off from his threat to impose 50% levies on all EU imports, which would have slashed global growth prospects. The commercial activity of the US and the Euro Area accounts for 30% of global trade and 43% of global GDP.

Dollar's recovery, however, night have short legs, as concerns about the ballooning US debt are looming. The US Senate will discuss a tax-slashing bill that is expected to raise the $36.2 trillion debt pile by $3.8 trillion over the next ten years. This fuelled a gradual sell-off on US assets during the previous week.

Later today, the US Durable Goods Orders and the Conference Board's Consumer Sentiment Index will provide further insight into the impact of Trump's tariff turmoil in the US economy. These figures are likely to set the USD direction ahead of the FOMC minutes and the key Personal Consumption Expenditures (PCE) Price Index figures, due later this week.

In New Zealand, the RBNZ is expected to cut rates by 25 basis points to 3.25% on Wednesday, and investors are bracing for a dovishly-leaning statement. The bank might point to further monetary easing, citing the potential impact of the uncertain trade scenario. This would add pressure on the Kiwi.