NZD/USD slips below 0.6000 amid a broadly stronger USD; lacks follow-through

• NZD/USD turns lower for the third straight day amid some follow-through USD buying.
• Trade optimism caps gains for the safe-haven buck and supports the risk-sensitive Kiwi.
• Traders also seem reluctant and might wait for the key FOMC decision on Wednesday.

The NZD/USD pair attracts fresh selling following an Asian session uptick to the 0.6030-0.6035 region and drifts into negative territory for the third straight day on Monday. The downward trajectory drags spot prices back below the 0.6000 psychological mark in the last hour and is sponsored by a broadly stronger US Dollar (USD).

The USD Index (DXY), which tracks the Greenback against a basket of currencies, builds on its gains registered over the past two days amid expectations that the Federal Reserve (Fed) will keep interest rates elevated for an extended period. The bets were reaffirmed by last week's upbeat US macro data, which pointed to a still resilient labor market. Moreover, concerns that higher US tariffs would reignite inflationary pressures in the second half of the year suggest that the Fed would maintain the status quo later this week. This, in turn, continues to push the USD higher for the third straight day and is exerting downward pressure on the NZD/USD pair.

Meanwhile, US President Donald Trump has repeatedly attacked Fed Chair Jerome Powell personally over his stance on holding rates. This adds to worries that the Fed's independence could be under threat on the back of mounting political interference, which might hold back the USD bulls from placing aggressive bets. Apart from this, the risk-on environment - bolstered by the latest trade optimism - could cap the safe-haven buck and offer some support to the NZD/USD pair. In the latest trade-related development, the US and the European Union (EU) announced a sweeping trade deal, with a baseline tariff of 15% on most European goods exported to the US.

This comes on top of the US-Japan trade agreement last week, which, along with reports that US and Chinese officials are meeting again on Monday to extend the trade truce, boosts investors' appetite for riskier assets. The USD bulls might also opt to wait for the highly anticipated two-day FOMC policy meeting, starting on Tuesday. In the meantime, the fundamental backdrop warrants some caution before positioning for any further depreciating move for the NZD/USD pair in the absence of any relevant market-moving US macro data.