New Zealand Dollar weakens to near 0.5650 on hawkish Fed stance

The NZD/USD pair trades in negative territory for the sixth consecutive day near 0.5655 during the early European trading hours on Wednesday. The US Dollar (USD) gathers strength against the New Zealand Dollar (NZD) as traders reassess the timing of possible US rate hikes after the Federal Reserve’s (Fed) hawkish signal. 

The Federal Open Market Committee (FOMC) voted unanimously to keep its benchmark overnight borrowing rate anchored in a range of 3.5%-3.75% at its June policy meeting. The announcement marked the first decision on interest rates since US President Donald Trump nominated Kevin Warsh to take the helm as Fed chair.

During the press conference, Warsh emphasized a commitment to bring inflation down to the Fed's desired level of 2%. Traders are now pricing in nearly a 86.1% odds of a Fed hike in December, up from 61% before last week’s FOMC meeting, according to the CME FedWatch tool. A hawkish tone from the US central bank underpins the Greenback and acts as a headwind for the pair. 

Traders await the release of the US May Personal Consumption Expenditures (PCE) data, the Fed’s preferred inflation gauge, which will be published on Thursday, for further cues on monetary policy.

The Kiwi has faced some selling pressure near the lowest level since late November 2025, pressured by tensions in the Middle East. US President Donald Trump said on Tuesday that Iran had "fully and completely" agreed to allow nuclear inspections, but Iran’s Foreign Minister Abbas Araghchi said earlier that real negotiations on the "nuclear issue" haven't started yet.

Iran's chief negotiator stated on Tuesday that the Strait of Hormuz will "never return to its pre-war conditions" and that Iran will maintain control of the vital waterway. Any signs of progress in the US-Iran peace agreement could help limit the NZD’s losses.