NZD/USD bounces from 0.6320 as DXY turns sideways ahead of Fed Powell’s testimony

• NZD/USD is recovering its corrective move as the focus shifts to the Fed testimony.
• The antipodean is expected to perform despite vulnerable Consumer Confidence.
• To tame the soaring inflation, the Fed could announce one more 75 bps rate hike

The NZD/USD pair has witnessed a minor recovery after hitting a low of 0.6322 in the late New York session. The asset is recovering after a corrective move from Monday’s high at 0.6364.  A sideways move is expected in the major as investors are on the sidelines ahead of the Federal Reserve (Fed) chair Jerome Powell’s testimony, which is due on Wednesday.

The US dollar index (DXY) has turned sideways after a bearish move as investors are awaiting Fed Powell’s testimony, which will provide a glimpse of the likely monetary policy action in July. It is worth noting that the Fed elevated its interest rates by 75 basis points (bps) last week. Thanks to the galloping inflation and extremely lower Unemployment Rate which has supported the Fed to take the necessary steps required for containing inflation. The Fed is expected to continue the unexpected and announce a consecutive 75 bps rate hike in July to roll back inflation's near-targeted rate quickly.

On the kiwi front, a stable monetary policy by the People’s Bank of China (PBOC) has supported the antipodean. New Zealand is a leading exporter to China, therefore a neutral stance on policy rates by the PBOC will keep the kiwi dollar stronger. Meanwhile, Consumer Confidence has landed extremely lower. The Westpac Consumer Survey for second quarter has been recorded at 78.7, much lower than the estimates of 100 and the prior print of 92.1.