NZD/USD remains above 0.5900 on dovish Fed outlook, awaits upcoming RBNZ decision

• NZD/USD appreciates as the US Dollar struggles amid dovish sentiment surrounding the Fed outlook.
• CME's FedWatch tool indicates a pricing in 84% probability of a 25 basis point Fed rate cut in September.
• The RBNZ is expected to deliver a 25 basis point rate cut on Wednesday.

NZD/USD edges higher after recovering its recent losses registered in the previous session, trading around 0.5930 during the early European hours on Tuesday. The pair appreciates as the US Dollar (USD) loses ground, as recent US economic data keeps intact the dovish tone surrounding the US Federal Reserve's (Fed) policy outlook.

CME's FedWatch tool suggests that markets are pricing in 84% odds of a 25 basis point Fed rate cut in September. Meanwhile, attention now shifts to the Federal Reserve's annual Jackson Hole symposium later this week, where global policymakers will discuss labor market dynamics and the outlook for monetary policy. Fed Chair Jerome Powell is scheduled to deliver remarks on the economy and the central bank's policy stance.

The risk-sensitive NZD/USD pair gains ground amid improved market sentiment, driven by positive signals toward a possible resolution of the Ukraine-Russia war. US President Donald Trump and Ukrainian President Volodymyr Zelenskyy both hoped that Monday's gathering would eventually lead to three-way talks with Russian President Vladimir Putin.

President Trump posted on social media, saying that he had spoken with the Russian leader and begun arranging a meeting between Putin and Zelenskyy, to be followed by a trilateral summit with all three presidents. Trump told European leaders that Putin had suggested this sequence. While the Kremlin has not publicly confirmed its agreement, a senior Trump administration official said the Putin-Zelenskyy meeting could be held in Hungary, per Reuters.

The New Zealand Dollar (NZD) may face challenges ahead of the Reserve Bank of New Zealand's (RBNZ) interest rate decision on Wednesday. Markets have priced in a 25 basis point rate cut to 3%, which could be attributed to weak domestic growth.

On the data front, the New Zealand Producer Price Index - Input by 0.6% quarter-on-quarter in the second quarter. The reading came below the expected 1.4% increase and a 2.9% gain prior. Meanwhile, Producer Price Index - Output increased by 0.6% for the same period, slowing from the previous rise of 2.1% and falling short of 1.0% expected increase.