NZD/USD languishes near two-week low, around mid-0.5800s ahead of PBOC rate decision

• NZD/USD continues to be weighed down by sustained USD buying at the start of a new week.
• A positive risk tone could offer some support to the Kiwi ahead of the key PBOC rate decision.
• Traders will further take cues from speeches by FOMC members for short-term opportunities.

The NZD/USD pair trades with a negative bias for the fourth successive day and touches a fresh two-week low, around the 0.5845 region during the Asian session on Monday amid sustained US Dollar (USD) buying. Traders now await the People's Bank of China (PBOC) interest rate decision before positioning for an extension of last week's rejection slide from the 0.6000 psychological mark, or the highest level since July 28.

The US Dollar Index (DXY), which tracks the Greenback against a basket of currencies, prolongs its recovery from a three-and-a-half-year low for the fourth straight day amid a positive assessment of Federal Reserve (Fed) Chair Jerome Powell's remarks. In fact, Powell told reporters during the post-meeting press conference that risks to inflation are tilted to the upside and that the Fed's rate reduction move was a risk management cut.

Furthermore, Powell added that he doesn't feel the need to move quickly on rates and that the Fed is in a meeting-by-meeting situation regarding the outlook for interest rates. Meanwhile, data released last Thursday showed the number of Americans filing new claims for unemployment benefits fell sharply from a near four-year high, which further acts as a tailwind for the USD and backs the case for a further depreciating move for the NZD/USD pair.

However, a generally positive tone around the equity markets could offer some support to the risk-sensitive Kiwi. Traders now look forward to the PBOC rate decision, which could drive demand for antipodean currencies and provide some meaningful impetus to the NZD/USD pair. Later during the North American session, speeches from a slew of influential FOMC members might further contribute to producing short-term trading opportunities.