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NZD/USD gains lift on weaker USD, capped near 0.5800

The pair’s upside is being tempered as traders wait for a two-day FOMC meeting, while New Zealand inflation data bolsters expectations for another RBNZ rate hike in September.

Reported · Written up by our desk · Major Pairs

FXStreet reports NZD/USD started the new week higher as the US Dollar weakened broadly, but the pair struggled to extend gains past the 0.5800 area.

The outlet links the softer USD to easing geopolitical risk premium after the US and Iran paused 13 straight nights of strikes, reviving hopes for diplomacy, and to lower crude oil prices that eased inflation concerns. FXStreet adds that Treasury bond yields pulled back modestly, helping keep the USD away from its recently retested monthly high.

Despite the support for NZD/USD, traders were not positioning aggressively against the USD as they looked ahead to a two-day FOMC policy meeting, with the Fed widely expected to leave interest rates unchanged on Wednesday. FXStreet says the Fed’s guidance on the future policy path is expected to drive USD price dynamics.

FXStreet also points to New Zealand’s stronger-than-expected inflation data, which reaffirmed expectations that the Reserve Bank of New Zealand will deliver another rate hike at its September meeting, providing a tailwind for the Kiwi and suggesting pullbacks may be bought in. The piece notes NZD can also be influenced by the performance of China, New Zealand’s biggest trading partner.

Latest closeWTI crude $90.47 ▼1.9%

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