• NZD/USD witnesses selling on Tuesday and snaps a four-day winning streak to a multi-week high.
• The cautious market mood exerts pressure on the risk-sensitive kiwi amid a modest USD bounce.
• Diminishing odds for aggressive Fed rate hikes, sliding US bond yields could cap gains for the USD.
• Investors eye US Job Openings for some impetus ahead of NZ employment figures on Wednesday.

The NZD/USD pair attracts some selling on Tuesday and erodes a major part of the previous day's gains to the highest level since June 21. Spot prices weaken further below the 0.6300 mark during the early European session and for now, seem to have snapped a four-day winning streak.

The prevalent cautious mood is turning out to be a key factor that acted as a headwind for the risk-sensitive kiwi. The market sentiment remains fragile amid growing worries about a global economic downturn. Apart from this, jitters about the impact of an impending visit to Taiwan by US House of Representatives Speaker Nancy Pelosi further temper investors' appetite for riskier assets.

The anti-risk flow assists the US dollar to stage a modest recovery from its lowest level since July 5, which further contributes to exerting downward pressure on the NZD/USD pair. That said, expectations that the Fed would not hike rates as aggressively as previously estimated, along with declining US Treasury bond yields, might cap the USD recovery. This, in turn, could lend support to the NZD/USD pair.

This makes it prudent to wait for a strong follow-through selling before confirming that the NZD/USD pair's recent rally from the 0.6060 area, or over a two-year low touched in July has run out of steam. Market participants now look forward to the US economic docket, featuring the release of the June JOLTS Job Openings data for some impetus later during the early North American session.

This, along with the US bond yields, might influence the USD price dynamics. Traders would further take cues from the broader market risk sentiment for short-term opportunities around the NZD/USD pair ahead of the quarterly employment figures from New Zealand, due on Wednesday. The focus, however, would remain glued to the closely-watched US monthly jobs report - popularly known as NFP on Friday.

Technical levels to watch