USD Strength Fades as NZD Holds Near Weekly Low Amid Hawkish Bets
The New Zealand Dollar (NZD) is trading near its weekly low against the US Dollar (USD), as bets for at least one interest rate hike by the Federal Reserve (Fed) in 2026 continue to support the USD. The NZD/USD pair slipped back below mid-0.5900s during the early European session on Thursday, following the release of the US Personal Consumption Expenditures (PCE) Price Index on Wednesday.
The PCE data pointed to still-sticky US inflation, reaffirming hawkish bets for a Fed rate hike in 2026 and helping the USD preserve its overnight gains. However, the US Treasury's buyback strategy is keeping US bond yields depressed, which, along with optimism over a potential US-Iran deal and the reopening of the Strait of Hormuz, is capping the safe-haven buck.
Media reports suggest that the US and Iran have reached a new ceasefire deal that would be announced in the coming days. Additionally, Iran and Oman have agreed on a temporary maritime route for commercial ships travelling through the waterway, easing inflation fears stemming from higher energy prices and supporting the NZD/USD pair amid the Reserve Bank of New Zealand's (RBNZ) hawkish tilt.
Traders seem hesitant to make fresh bets until they receive more cues about the Fed's future policy path. The focus will remain on Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium on Friday, which is expected to drive the USD and provide a fresh impetus to the NZD/USD pair.