NZD/USD clings to strong gains near daily peak, eyes mid-0.6200s amid weaker USD

• NZD/USD catches fresh bids on Tuesday and draws support from a modest USD weakness.
• Easing fears of a banking crisis, the Fed’s less hawkish outlook weighs on the Greenback.
• Rallying US bond yields could act as a tailwind for the buck and cap the upside for the pair.

The NZD/USD pair regains positive traction on Tuesday, following the previous day's directionless price moves, and sticks to its strong intraday gains, around the 0.6230-0.6235 area heading into the North American session.

Receding fears of a full-blown banking crisis, along with the Federal Reserve's less hawkish outlook, drags the US Dollar (USD) lower for the second successive day and turns out to be a key factor lending support to the NZD/USD pair. The market nerves about the contagion risk calmed following the takeover of Silicon Valley Bank by First Citizens Bank & Trust Company. Adding to this, regulators reassured that they stood ready to address any liquidity shortfalls further boosted investors' confidence and helped reverse the recent negative sentiment.

The US central bank, meanwhile, toned down its aggressive approach to reining in inflation and signalled last week that a pause to interest rate hikes was on the horizon. This further contributes to the underlying bearish sentiment surrounding the Greenback and acts as a tailwind for the NZD/USD pair. That said, a strong follow-through rally in the US Treasury bond yields could limit deeper losses for the USD, which might hold back traders from placing aggressive bullish bets around the major and keep a lid on any further gains, at least for the time being.

Even from a technical perspective, the recent two-way price moves witnessed over the past two weeks or so, within a familiar trading range, point to indecision over the near-term trajectory for the NZD/USD pair. Moreover, last week's failure to find acceptance above the 200-day Simple Moving Average (SMA) further warrants some caution before placing aggressive bullish bets and positioning for a further appreciating move. Market participants now look forward to the US macro data to grab short-term trading opportunities.

Tuesday's US economic docket features the release of the Conference Board's Consumer Confidence Index and the Richmond Manufacturing Index. This, along with the US bond yields and the broader risk sentiment, might influence the USD price dynamics and provide some impetus to the NZD/USD pair. The focus, however, will remain glued to the Fed's preferred inflation gauge, the US Core PCE Price Index, due on Friday.

Technical levels to watch