NZD/USD Weakens to 0.5875 Amid Middle East Tensions
The New Zealand dollar (NZD/USD) pair has weakened to around 0.5875 due to escalating tensions in the Middle East, which boosted a safe-haven currency like the US Dollar (USD). The increase in US military presence in the region has led Iran's Chief of Staff Major General Ali Abdollahi to warn Persian Gulf states against providing assistance to the US army.
However, analysts at Scotiabank believe that traders have reduced their bets on a US Federal Reserve (Fed) rate hike in September following unexpected job losses and tame inflation data. This could weigh on the Greenback and cap the downside for the NZD/USD pair.
The RBNZ has faced criticism from strategists at BNY, who question the market's expectation of two more Reserve Bank of New Zealand (RBNZ) hikes by year-end. They argue that domestic activity remains robust, but inflation expectations are relatively well-anchored, making additional rate increases less compelling.
The NZD/USD pair maintains a mildly positive tone above the 100-day SMA, with spot remaining above the Bollinger Bands' middle SMA and hinting at underlying demand on dips. The Relative Strength Index (14) around 55 keeps a neutral-to-positive tone, suggesting upside pressure is present but not stretched.