New Zealand Dollar hits over two-week top vs USD on Iran peace deal optimism, hawkish RBNZ
- NZD/USD scales higher for the third straight day amid a combination of supporting factors.
- Hawkish RBNZ underpins the NZD, while the US-Iran peace deal reports weigh on the USD.
- Fed rate hike bets help limit the USD losses and might cap the upside for the currency pair.
The NZD/USD pair is seen building on this week's solid bounce from a technically significant 200-day Simple Moving Average (SMA) support near the 0.5835 region and gaining positive traction for the third successive day on Friday. The momentum lifts spot prices to over a two-week high, around mid-0.5900s, during the Asian session, and is sponsored by a combination of factors.
The New Zealand Dollar (NZD) continues to draw support from the Reserve Bank of New Zealand's (RBNZ) hawkish on-hold rate decision earlier this week and is seen as a key factor acting as a tailwind for the NZD/USD pair. The RBNZ, as was widely expected, left the Official Cash Rate (OCR) unchanged at 2.25% for the third consecutive meeting in May. In the accompanying policy statement, however, the central bank said that the OCR will likely need to increase sooner and by more than envisaged in the February policy statement.
Furthermore, the latest optimism over a US-Iran peace deal keeps the US Dollar (USD) bulls on the defensive and contributes to the bid tone surrounding the NZD/USD pair. Axios, citing two US officials, reported that the US and Iran have reached a draft agreement to extend the ongoing ceasefire for 60 days, pending US President Donald Trump’s final approval. However, the US and Iran remain at odds over key issues, including Tehran's nuclear program and the Strait of Hormuz. This keeps the enthusiasm in check.
Meanwhile, traders are still pricing in a nearly 50% chance that the US Federal Reserve (Fed) will hike interest rates by the end of this year. The bets were reaffirmed by the US Personal Consumption Expenditures (PCE) Price Index on Thursday, showing that the US inflation increased at its fastest pace in three years in April. This, in turn, holds back the USD bears from placing aggressive bets and might cap further gains for the NZD/USD pair. Nevertheless, spot prices remain on track to register strong weekly gains.
Moreover, this week's breakout through a strong resistance zone ahead of the 0.5900 mark, or the top boundary of over a one-week-old trading range, backs the case for an extension of a three-day-old uptrend. Hence, any corrective pullback might still be seen as a buying opportunity and remain cushioned in the absence of any relevant market-moving economic releases from the US.
New Zealand Dollar Price This week
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies this week. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | 0.07% | 0.25% | -0.20% | -0.04% | -1.26% | -0.13% | |
| EUR | 0.11% | 0.21% | 0.41% | -0.09% | 0.03% | -1.16% | -0.03% | |
| GBP | -0.07% | -0.21% | -0.04% | -0.29% | -0.18% | -1.37% | -0.20% | |
| JPY | -0.25% | -0.41% | 0.04% | -0.47% | -0.33% | -1.54% | -0.40% | |
| CAD | 0.20% | 0.09% | 0.29% | 0.47% | 0.13% | -1.08% | 0.11% | |
| AUD | 0.04% | -0.03% | 0.18% | 0.33% | -0.13% | -1.19% | -0.06% | |
| NZD | 1.26% | 1.16% | 1.37% | 1.54% | 1.08% | 1.19% | 1.19% | |
| CHF | 0.13% | 0.03% | 0.20% | 0.40% | -0.11% | 0.06% | -1.19% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
Author
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
