NZD/USD remains vulnerable near 0.5840 lows on a slightly firmer US Dollar

• The New Zealand Dollar gives away Monday's gains and returns below 0.5850.
• The US Dollar picks up from Monday´s lows ahead of the US flash PMIs and Fed Powell's conference.
• Weak New Zealand data is boosting expectations of further RBNZ easing and weighing on the NZD.

The New Zealand Dollar has given away Monday's gains against the US Dollar, retreating from the 0.5870 area to levels right above two-week lows near 0.5840, weighed by a moderate US Dollar's recovery, ahead of US PMI data and Fed Powell's speech.

The US Dollar took a breather on Monday after rallying more than 2% against the kiwi over the last three days. Fed speakers offered a wide range of opinions about the monetary policy path, but they failed to change the market's view that further rate cuts are imminent.

Investors, however, are taking a more cautious stance on Tuesday, awaiting preliminary PMI figures for September and a speech on the economic outlook by Fed Chair Jerome Powell for further clues about the bank's forward guidance.

Business activity is expected to have slowed down moderately in September, and the risk is on a sharper-than-expected slowdown, which would highlight the negative impact from tariffs and force Fed's Powell to adopt a more dovish stance.

In New Zealand, data released last week disappointed, with the Gross Domestic Product contracting beyond expectations and the trade deficit widening. These figures have boosted speculation of further RBNZ rate cuts, which is keeping the Kiwi's upside attempts limited.