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- NZD/USD attracts sellers for the second straight day as Iran tensions continue to underpin the USD.
- Elevated Oil prices revive Inflation fears, tempering dovish Fed bets and further benefiting the buck.
- Expectations that the RBNZ may consider tightening policy could limit losses for the NZD and the pair.
The NZD/USD pair is seen extending this week’s retracement slide from the 0.5925-0.5930 horizontal barrier and drifting lower for the second straight day on Friday. Spot prices slide back to the 0.5840 region during the Asian session and seem vulnerable near a technically significant 200-day Simple Moving Average (SMA) amid a bullish US Dollar (USD).
The USD Index (DXY), which tracks the Greenback against a basket of currencies, retains its positive bias for the fourth straight day on the back of intensifying US-Iran tensions. Moreover, the lack of progress in peace talks, due to a standoff over the Strait of Hormuz, keeps investors on edge and further benefits the USD’s safe-haven status. This, in turn, is seen as a key factor exerting some downward pressure on the NZD/USD pair.
US President Donald Trump said on Tuesday that the US Navy blockade of Iranian ports will continue, while Iran has set the complete removal of the blockade as a strict precondition for resuming negotiations. Furthermore, Trump ordered the US Navy to shoot and kill any boat laying mines in the critical shipping channel. This keeps geopolitical risks in play and dampens hopes for a durable de-escalation, underpinning the USD.
Meanwhile, continued disruptions to energy supplies remain supportive of elevated Crude Oil prices and fuel inflationary fears, tempering hopes for a dovish US Federal Reserve (Fed). Traders now see the possibility of only one 25-basis-point (bps) rate cut by the Fed in 2026. This backs the case for a further appreciating move for the USD and suggests that the path of least resistance for the NZD/USD pair is to the downside.
However, persistent sticky inflation has spurred bets that the Reserve Bank of New Zealand (RBNZ) may maintain a cautious policy stance or consider tightening to bring inflation back to the 2% midpoint. In fact, data earlier this week showed that New Zealand’s annual inflation held at 3.1% in the March 2026 quarter, slightly above the central bank’s 1–3% target range. This could limit losses for the New Zealand Dollar (NZD) and the NZD/USD pair.
