NZD/USD bounces off one-week low; remains below 0.6000 as traders await FOMC decision on Wednesday

• NZD/USD finds some support during the Asian session as the USD bulls pause for a breather.
• A possible extension of the US-China trade truce also acts as a tailwind for the antipodean Kiwi.
• Traders, however, seem reluctant and opt to wait for the crucial FOMC decision on Wednesday.

The NZD/USD pair rebounds a few pips from a one-week trough touched during the Asian session on Tuesday and climbs to the 0.5975 region in the last hour. Spot prices, for now, seem to have snapped a three-day losing streak, though any meaningful recovery seems elusive.

The US Dollar (USD) pauses following the previous day's sharp rally to a one-and-a-half week high and turns out to be a key factor acting as a tailwind for the NZD/USD pair. Apart from this, the latest trade optimism and a possible extension of the US-China trade truce turn out to be another factor lending some support to antipodean currencies, including the Kiwi.

Meanwhile, the downside for the USD remains limited in the wake of the growing acceptance that the Federal Reserve (Fed) will keep interest rates elevated on the back of worries that higher US tariffs would boost inflation. Traders might also opt to wait for the crucial FOMC decision on Wednesday before placing directional bets around the NZD/USD pair.

In the meantime, Tuesday's US economic docket - featuring the release of JOLTS Job Openings and the Conference Board's Consumer Confidence Index - will be looked upon for some impetus later during the North American session. Nevertheless, the fundamental backdrop warrants caution for the NZD/USD bulls and positioning for any meaningful appreciation.