NZD/USD Rises Amid Weaker USD, Rate Hike Expectations

The NZD/USD pair started the week on a positive note due to a broadly weaker US Dollar. The ongoing tensions between the US and Iran have paused, reviving hopes for a diplomatic resolution to their five-month-old conflict.

This has led to traders unwinding some of the geopolitical risk premium, which in turn undermines the safe-haven USD and lends support to the NZD/USD pair.

The latest optimism also triggered a steep decline in crude oil prices, easing inflationary fears and tempering US Federal Reserve rate-hike expectations. This is evident from a modest pullback in US Treasury bond yields, which drags the USD away from its vicinity of the monthly high retested last week.