NZD/USD approaches highs above 0.5840 amid a positive risk mood

• The New Zealand Dollar approaches last week's highs above 0.5840 after bouncing from 0.5810.
• A moderately positive mood is buoying the Kiwi in Monday's early European session.
• The RBNZ is expected to deliver a "dovish cut" on Wednesday that might hurt the NZD's recovery.
  

Investors' sentiment has brightened, and risk-sensitive currencies, like the New Zealand Dollar, are outperforming their peers at the week's opening. The NZD/USD has bounced from 0.5810 lows earlier on the day and is drawing closer to last week's highs, at the 0.5840 area.

The positive risk sentiment is offsetting market expectations that the Reserve Bank of New Zealand will cut its Official Cash Rate (OCR) to a 3-year low below the current 3% after their monetary policy meeting on Wednesday.

A dovish RBNZ might snap the Kiwi's recovery

Markets are split on the possibility of a 25 or a 50 basis points rate cut. Anyway, the bank's statement is likely to be tilted to the dovish side, laying the ground for further monetary easing amid the global trade uncertainty, which might add pressure on the NZD.

The US Dollar, on the other side, remains weighed by the ongoing standoff between US Senate Democratic and Republican leaders, which is leading the US shutdown into its second week, threatening to be a protracted one.

In the absence of government data releases, the main driver for the US Dollar is the comments from Fed officials, who remain deeply divided about the forward guidance. In this context, the minutes of the last Fed meeting are likely to shed some light on the bank's near-term policy, although the market remains convinced that a rate cut in October is a done deal, and another one in December is highly likely. This sentiment is keeping US Dollar rallies limited.