Key Moments
- NZD/USD retreated to the 0.5825 area after failing again to clear its 200-day Simple Moving Average.
- Renewed geopolitical tensions and concerns over inflation supported the US Dollar and pushed US Treasury yields higher.
- A dovish Reserve Bank of New Zealand and Fitch Ratings’ downgrade of New Zealand’s credit outlook further weighed on the Kiwi.
NZD/USD Retreats After Rejection at 200-Day SMA
The NZD/USD pair came under fresh selling pressure during the Asian session on Tuesday as it once again failed to break above its technically important 200-day Simple Moving Average. The pair dropped toward the 0.5825 zone in the latest trading, unwinding part of the prior session’s rebound from a low not seen in more than two months. Price action left the pair looking vulnerable to additional downside moves.
Geopolitical Anxiety Lifts USD and Dampens Risk Appetite
The US Dollar regained upward momentum as ongoing geopolitical tensions in the Middle East continued to fuel demand for safe-haven assets. This renewed strength in the Greenback exerted pressure on NZD/USD.
President Donald Trump said on Monday that the US had held productive conversations with Iran and that a deal could be reached soon. The optimism, however, fades rather quickly after Iran denied that it had held talks with the US to end the war in the Gulf.
Moreover, Mohsen Rezaei, the senior military adviser to Iranian Supreme Leader Mojtaba Khamenei, said that the war will continue until Iran receives full compensation for the damage it has sustained. Adding to this, reports of strikes on Iran’s gas infrastructure raise the risk of a further escalation and temper investors’ appetite for riskier assets. This supports the US Dollar’s status as the primary global reserve currency and draws capital away from higher-beta currencies such as the New Zealand Dollar.
Inflation Concerns and Fed Expectations Support the Dollar
Market participants remained concerned that conflict-related spikes in energy prices could reignite inflation. In response, investors have been paring back expectations for additional interest rate cuts by the US Federal Reserve. These shifting expectations pushed US Treasury yields higher, offering further support to the US Dollar and adding to downward pressure on NZD/USD.
Domestic Headwinds for the New Zealand Dollar
On the New Zealand side, the policy stance of the Reserve Bank of New Zealand has been perceived as dovish, which has been a drag on the currency. In addition, Fitch Ratings’ downgrade of New Zealand’s credit outlook has reinforced a negative bias toward the Kiwi. Combined with the stronger USD backdrop, these factors have underpinned a generally bearish view on the NZD/USD pair.
US Dollar Performance Against Major Currencies
The following table shows the percentage change of the US Dollar against major counterparts today, with the US Dollar strongest versus the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.31% | 0.34% | 0.21% | 0.25% | 0.72% | 0.55% | 0.30% | |
| EUR | -0.31% | 0.00% | -0.11% | -0.07% | 0.41% | 0.24% | -0.01% | |
| GBP | -0.34% | -0.01% | -0.09% | -0.08% | 0.40% | 0.23% | -0.02% | |
| JPY | -0.21% | 0.11% | 0.09% | 0.04% | 0.52% | 0.34% | 0.10% | |
| CAD | -0.25% | 0.07% | 0.08% | -0.04% | 0.48% | 0.30% | 0.05% | |
| AUD | -0.72% | -0.41% | -0.40% | -0.52% | -0.48% | -0.17% | -0.44% | |
| NZD | -0.55% | -0.24% | -0.23% | -0.34% | -0.30% | 0.17% | -0.25% | |
| CHF | -0.30% | 0.01% | 0.02% | -0.10% | -0.05% | 0.44% | 0.25% |
The heat map above reflects percentage changes of major currencies relative to one another. The base currency is indicated in the left-hand column, and the quote currency along the top row. For instance, selecting the US Dollar as the base and moving horizontally to the Japanese Yen cell shows the percentage change for USD (base)/JPY (quote).
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
