NZD/USD sits near two-week high set on Friday, comfortably above 0.6100 mark

• NZD/USD holds steady above 0.6100, though a modest USD strength caps any further gains.
• An intraday uptick in the US bond yields lends support to the buck and acts as a headwind.
• Traders also seem reluctant ahead of the US CPI on Tuesday and the FOMC on Wednesday.

The NZD/USD pair struggles to capitalize on its gains registered over the past two trading days and oscillates in a narrow band, just above the 0.6100 mark heading into the European session on Monday.

The US Dollar (USD) edges higher for the second successive day and turns out to be a key factor that keeps the NZD/USD pair below a two-and-half-week top, around the 0.6135-0.6140 region touched on Friday. A modest uptick in the US Treasury bond yields acts as a tailwind for the Greenback. The uncertainty over the Federal Reserve's (Fed) rate-hike path, however, caps any meaningful upside for the buck and continues to lend some support to the major.

It is worth recalling that the recent dovish rhetoric by several Fed officials boosted expectations for an imminent pause in the US central bank's rate-hiking cycle. That said, surprise rate hikes by the Reserve Bank of Australia (RBA) and the Bank of Canada  (BoC) last week suggested that the fight against inflation is not over. This, in turn, supports prospects for further policy tightening by the Fed and reinforces markets bets for another 25 bps lift-off in July.

Hence, the focus will remain glued to the release of the latest US consumer inflation figures on Tuesday, which will be followed by the outcome of the highly-anticipated two-day FOMC monetary policy meeting on Wednesday. Investors will look for fresh cues about the Fed's near-term policy outlook. This, in turn, will play a key role in influencing the USD price dynamics and help traders to determine the next leg of a directional move for the NZD/USD pair.

In the meantime, worries about a global economic slowdown, particularly in China, could act as a headwind for antipodean currencies, including the Kiwi, in the absence of any relevant market-moving economic releases from the US. Apart from this, the Reserve Bank of New Zealand's (RBNZ) explicit signal that it was done with its most aggressive hiking cycle since 1999 warrants some caution before positioning for any further appreciating move for the NZD/USD pair.

Technical levels to watch