NZD Bounces Back From Two-Week Low Amid Fading Fed Hike Expectations

The New Zealand Dollar (NZD) has recovered from its two-week low as fading expectations for a US Federal Reserve rate hike have undermined the US Dollar.

Following the release of US Consumer Price Index and Producer Price Index reports, which showed signs of cooling inflation, traders have pared their bets on an immediate rate hike by the Fed.

This has led to a defensive posture among USD bulls, supporting the NZD/USD pair in its recovery. However, the ongoing US-Iran standoff continues to act as a tailwind for the safe-haven buck, limiting aggressive directional bets.

The recent tensions have kept the war risk premium in play and offered support to the greenback, despite rising crude oil prices due to attacks on vessels in the Red Sea and Bab el-Mandeb Strait.