Key Moments
- NZD/USD trades near 0.5620 after failing to extend a brief recovery from its post-RBNZ two-week low.
- Expectations for another Fed rate hike and elevated geopolitical tensions support renewed demand for the USD.
- Traders focus on the Advance US Q3 GDP report and US PCE data for direction on the Fed policy outlook and USD trends.
NZD/USD Under Pressure After Post-RBNZ Rebound Fades
The NZD/USD pair comes under renewed selling pressure after a modest rise during the Asian session toward the 0.5635-0.5640 zone on Thursday. That move had extended the prior day’s rebound from a two-week low reached following the latest Reserve Bank of New Zealand (RBNZ) policy announcement. However, the recovery has stalled, and the pair is now trading around 0.5620, where it appears vulnerable amid a fresh pickup in demand for the US Dollar (USD).
Stronger Dollar Backed by Fed Expectations and Risk-Off Mood
The US Dollar Index (DXY), which measures the USD against a basket of major peers, is regaining upside momentum after a corrective pullback on Wednesday from a two-week high following the FOMC-related move. The renewed strength is driven by a combination of supportive factors.
US Federal Reserve (Fed) Chair Kevin Warsh told reporters that the central bank remains vigilant regarding persistent inflation and geopolitical risks. Alongside concerns about energy-related price pressures, this reinforces expectations for additional Fed tightening. Data from the CME Group’s FedWatch Tool show that market participants are assigning roughly an 80% probability that the Fed will raise interest rates again in December. These rate expectations, together with worries about a potential further escalation of tensions in the Middle East, are boosting the appeal of the safe-haven USD.
Geopolitical Risks Add to Safe-Haven Demand
Geopolitical developments continue to influence market sentiment. The Wall Street Journal reported on Tuesday that US officials have advised several Gulf Arab states to prepare for a short and intense military operation against Iran after the November 3 midterm elections. In response, Iranian Foreign Minister Abbas Araghchi stated that armed forces are prepared to defend the country, while emphasizing that Tehran will stay in close contact with intermediaries to allow room for diplomacy.
At the same time, fierce fighting between Iran-backed Houthi forces and the Saudi Arabia-backed government in Yemen is helping to maintain a geopolitical risk premium. This broader backdrop is lending additional support to the USD.
RBNZ Decision Weighs on New Zealand Dollar
While the USD benefits from higher Fed rate expectations and geopolitical risk aversion, the New Zealand Dollar (NZD) is pressured by the RBNZ’s unexpected decision to leave interest rates unchanged. That surprise on-hold stance continues to drag on the NZD and limits any meaningful upside in NZD/USD.
Even so, USD bulls are showing some caution, preferring to await more concrete signals on the Fed’s policy trajectory before building new positions. As a result, attention is now firmly on upcoming US data releases, specifically the Advance Q3 Gross Domestic Product (GDP) report and the Personal Consumption Expenditures (PCE) Price Index.
These releases are expected to be pivotal for shaping expectations on the future path of US interest rates and, by extension, for near-term USD performance. Given the existing macro and policy divergence between the Fed and the RBNZ, the broader setup continues to point toward a downside bias for NZD/USD, with the path of least resistance still skewed lower.
US Dollar Performance Against Major Currencies
The following table shows the intraday percentage change of the US Dollar against major currencies. On this basis, the USD has been strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.00% | -0.11% | -0.06% | 0.01% | 0.05% | 0.00% | |
| EUR | -0.04% | -0.04% | -0.16% | -0.13% | -0.03% | 0.00% | -0.04% | |
| GBP | -0.01% | 0.04% | -0.11% | -0.10% | 0.00% | 0.05% | -0.00% | |
| JPY | 0.11% | 0.16% | 0.11% | 0.02% | 0.12% | 0.13% | 0.10% | |
| CAD | 0.06% | 0.13% | 0.10% | -0.02% | 0.10% | 0.13% | 0.10% | |
| AUD | -0.01% | 0.03% | -0.01% | -0.12% | -0.10% | 0.05% | -0.01% | |
| NZD | -0.05% | -0.00% | -0.05% | -0.13% | -0.13% | -0.05% | -0.01% | |
| CHF | -0.01% | 0.04% | 0.00% | -0.10% | -0.10% | 0.01% | 0.00% |
The heat map is read by selecting the base currency from the left column and the quote currency from the top row. For instance, choosing the US Dollar on the left 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 
