New Zealand Dollar declines to weekly low as USD holds firm ahead of FOMC Minutes
The NZD/USD pair is seen extending this week's retracement slide from the 0.5925 area, or the highest since June 3, and drifting lower for the second straight day on Wednesday.
The New Zealand Dollar (NZD) hit a weekly low against the US Dollar (USD) as the greenback held steady ahead of the Federal Open Market Committee (FOMC) minutes release. The NZD/USD pair slipped to its lowest since June 3, trading near the mid-0.5800s during the Asian session. The US Dollar (USD) strengthened due to anticipation of the FOMC minutes, which would provide essential clues about the Federal Reserve's (Fed) future policy direction and impact the NZD/USD exchange rate.
Inflation concerns from high oil prices, driven by the Middle East crisis, continued to bolster the US Treasury bond yields, further supporting the USD. The ongoing US-Iran standoff, with President Donald Trump asserting that the US is not engaging in talks with Iran, and the Strait of Hormuz being held captive by Tehran, added to the geopolitical risks and bolstered the safe-haven appeal of the USD.
Meanwhile, global supply disruptions fueled crude oil prices to a nearly three-week high, reigniting inflation worries and maintaining expectations of at least one Federal Reserve rate hike in 2026. The Reserve Bank of New Zealand (RBNZ) took a hawkish stance, advocating for further rate hikes, which could aid the NZD and limit the currency's losses.
Technical analysis indicates a constructive near-term bias for the NZD/USD pair above the 200-period Simple Moving Average (SMA) at 0.5821, with potential resistance at the Fibonacci anchor around 0.5924. On the downside, support is expected at the 23.6% retracement level at 0.5854 and the 200-period SMA near 0.5821.
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