Dollar Hits Two-Week Peak as Kiwi Tumbles on RBNZ Pivot

The US dollar continued its upward trend on Wednesday, reaching a two-week peak as major rivals fell to multi-week lows. The greenback's strength was fueled by a dovish pivot from New Zealand's central bank, which sent the kiwi plummeting over 1% to hit its lowest level since late-July.

The Reserve Bank of New Zealand (RBNZ) raised interest rates by 25 basis points but paired the move with unexpectedly dovish forward guidance. RBNZ officials signaled that an October rate increase is far from guaranteed and emphasized data-dependent flexibility, leading institutional desks to rapidly unwind bets on consecutive rate hikes.

Across European and North American pairs, currency action reflected a mix of central bank positioning and geopolitical risk management. The Euro slid 0.2% to a near two-week low as a drop in underlying core CPI limited the European Central Bank's hawkish momentum ahead of its Sept. 10 meeting.