NZD/USD rebounds from a three-month low at 0.5857 recorded on Monday.
The US Dollar may struggle due to dovish sentiment surrounding the Fed’s policy decision.
The New Zealand Dollar faced challenges due to the disappointing economic outlook in China.
NZD/USD trades higher around 0.5900 during the early European hours on Tuesday. The New Zealand Dollar (NZD) rebounded against the US Dollar (USD) after hitting a three-month low at 0.5857 on Monday.
The NZD/USD pair might appreciate further as the US Federal Reserve (Fed) is expected to keep rates unchanged on Wednesday. However, traders anticipate a Fed rate cut in September, with the CME FedWatch Tool indicating a 100% probability of at least a quarter percentage point cut.
Additionally, signs of cooling inflation and easing labor market conditions in the United States have fueled expectations of three rate cuts by the Fed this year. However, last week, Bank of America indicated that strong economic growth in the United States allows the Federal Open Market Committee (FOMC) to "afford to wait" before making any changes. The bank states that the economy "remains on robust footing" and continues to expect the Fed to start cutting rates in December.
