New Zealand Dollar extends gains to fresh high since June, above mid-0.5900s vs softer USD

The New Zealand Dollar (NZD) has maintained its upward trend and reached a fresh high since early June, trading around 0.5965-0.5970 during the Asian session on Friday. The US Dollar (USD) has struggled to capitalize on its previous day's bounce from a three-month low due to muted expectations of an immediate interest rate hike by the US Federal Reserve (Fed).

In contrast, the NZD has drawn support from the anticipation of another interest rate hike by the Reserve Bank of New Zealand (RBNZ). This, along with hawkish remarks from the US Federal Open Market Committee (FOMC) minutes, suggests a possibility of policy tightening in the near future. Furthermore, traders are adding a geopolitical risk premium to their calculations due to the US-Iran tensions over the Strait of Hormuz.

Despite these factors, investors remain cautious about inflation risks from higher oil prices caused by the Middle East crisis. The NZD/USD pair has now surpassed the 200-period Exponential Moving Average (EMA) at 0.5851, providing a bullish near-term outlook for the currency pair. Traders are eagerly awaiting the release of flash US PMI data, which, along with geopolitical developments, will influence the USD and present short-term trading opportunities for the NZD/USD pair.