The NZD/USD pair struggles to capitalize on its modest uptick and seesaws between tepid gains/minor losses through the first half of trading on Monday. The pair is currently placed around the 0.6175 region, nearly unchanged for the day and just below a one-and-half-week high touched during the Asian session.

The prospects for further interest rate hikes by the Federal Reserve (Fed), along with looming recession risks, help the US Dollar (USD) to gain traction for the third successive day and turn out to be a key factor capping gains for the NZD/USD pair. In fact, the markets have fully priced in another 25 bps lift-off at the end of the highly-anticipated two-day FOMC policy meeting on Wednesday. Furthermore, weaker Chinese manufacturing data released on Sunday weigh on investors' sentiment and benefits the safe-haven Greenback.

In fact, the official Chinese Manufacturing Purchasing Managers' Index (PMI), released on Sunday, declined to 49.2 in April from 51.9 in March. The data comes on the back of the Advance US GDP report last week, which showed that growth in the world's largest economy decelerated at a faster-than-expected pace during the first quarter, and adds to worries about economic headwinds stemming from rising borrowing costs. This, in turn, drives some haven flows towards the buck and contributes to keeping a lid on the NZD/USD pair.

The markets, meanwhile, seem convinced that the US central bank will hold rates steady for the rest of the year beyond May, which is holding back the USD bulls from placing aggressive bets and lending some support to the NZD/USD pair. Traders also prefer to wait on the sidelines ahead of the key central bank event risk. In the meantime, Monday's release of the US ISM Manufacturing PMI, along with the broader risk sentiment, might influence the USD price dynamics and produce short-term trading opportunities around the major.