NZDUSD keeps the red below 0.5900 mark amid the emergence of some USD buying

• NZDUSD opens with a modest weekly bearish gap amid the emergence of some USD buying.
• Elevated US bond yields and a weaker risk tone help revive demand for the safe-haven buck.
• Bulls might wait for a sustained move beyond the 0.5935-0.5940 area before placing fresh bets.

The NZDUSD pair attracts some buying following a modest bearish gap opening to the 0.5855-0.5850 area on Monday, albeit struggles to capitalize on the move. Spot prices retreat a few pips from the daily top and remain on the defensive below the 0.5900 mark through the early European session amid a modest US Dollar strength.

A combination of supporting factors assists the USD to regain some positive traction on the first day of a new week and recover a part of Friday's post-NFP slump. In fact, the mixed results from the closely-watched US monthly jobs report fueled speculations that the Federal Reserve could slow the pace of future rate hikes and weighed heavily on the greenback. That said, elevated US Treasury bond yields, along with a softer tone, helps limit any further losses for the safe-haven buck and act as a headwind for the NZDUSD pair.

The market sentiment remains fragile amid concerns about headwinds stemming from China's commitment to maintaining its economically disruptive zero-COVID policy. This comes amid the protracted Russia-Ukraine war and adds to growing worries about a deeper global economic downturn. Even from a technical perspective, the emergence of fresh selling ahead of the mid-0.5900s warrants caution for bullish traders. Hence, it will be prudent to wait for strong follow-through buying before positioning for any meaningful upside for the NZDUSD pair.

There isn't any major market-moving economic data due for release from the US, leaving the USD at the mercy of the US bond yields. Apart from this, traders will take cues from the broader market risk sentiment to grab short-term opportunities around the risk-sensitive Kiwi. That said, the mixed fundamental backdrop might force short-term traders to move to the sidelines ahead of the release of the latest US consumer inflation figures on Thursday.

Technical levels to watch