NZD/USD remains under 0.5900 as tensions in Hormuz undermine optimism for Iran diplomacy and bolster the US dollar
NZD/USD Continues to Decline Amid Geopolitical Uncertainty
NZD/USD extended its downward movement for a second consecutive session on Friday, following a pullback from the 0.5920-0.5925 range—its highest point since March 11. During early European trading hours, the pair remained subdued below 0.5900, though the current decline lacks strong bearish momentum.
Although a recent 10-day ceasefire between Israel and Lebanon has sparked some optimism, market participants remain wary due to ongoing tensions in the Strait of Hormuz, where a US naval blockade continues to impact Iranian ports. This environment has supported the safe-haven US Dollar (USD), helping it maintain the modest rebound seen in the previous session from its lowest level since late February. However, expectations for a potential US-Iran agreement are tempering the enthusiasm of USD buyers.
US President Donald Trump expressed confidence on Thursday, suggesting that Iran may be nearing a deal. Supporting this outlook, the Wall Street Journal reported that both Washington and Tehran have agreed in principle to resume discussions, though specifics regarding timing and location remain undecided. Ongoing diplomatic efforts to resolve Middle East tensions, combined with diminishing expectations for a hawkish stance from the Federal Reserve, are limiting further advances for the USD.
Currently, markets are factoring in about a 30% probability of a Fed rate cut before the end of the year. This anticipation is discouraging aggressive USD buying and providing some support for NZD/USD. Investors may also choose to await further developments in the US-Iran situation, which could continue to drive volatility and create trading opportunities across global markets. Despite these uncertainties, the currency pair is on track to post gains for a second straight week, with traders now focusing on upcoming remarks from key FOMC officials for additional direction.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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