In the early hours of Monday's Asian session, the NZD/USD pair hovers around 0.5930, extending the gains from the previous trading session. Advanced United States (US) government bond yields may exert a downward pressure on the pair. The 10-year Treasury yields have reached their greatest level since 2007, which could contribute to the dollar's strength.

Analysts at Kiwibank stated in a report that the Official Cash Rate (OCR) trajectory was more hawkish than anticipated. In the future months, the RBNZ intends to ensure that the recent tightening measures have a significant impact on households. To maintain elevated wholesale rates and to keep mortgage and other lending rates high, any considerations of reducing interest rates were suppressed on purpose.

In addition, the Reserve Bank of New Zealand (RBNZ) maintains its projection for the official cash rate (OCR) to remain at 5.5%, as indicated in the monetary policy review (MPR). In addition, the MPR indicated a 40% chance of an additional 25 basis point (bps) increase in 2024. This prospective development could affect the NZD/USD exchange rate.

The US Dollar Index (DXY), which measures the value of the greenback relative to a portfolio of other currencies, fluctuates around 103.30. The US Dollar (USD) may be supported by expectations that the Federal Reserve (Fed) will maintain its hawkish posture as a result of positive macroeconomic data in the United States.

Later in the North American session, the US Existing Home Sales Change (MoM) will be keenly monitored by market participants. Later in the week, Fed Chair Jerome Powell's speech at Jackson Hole will be closely watched for fresh insights into the US economic outlook and inflation situation.

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