New Zealand Dollar consolidates around 0.5675 vs USD as bears await Trump-Xi summit
The NZD/USD pair flatlines around the 0.5675 region, trading just above its lowest level since early July, set the previous day, as investors await a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping.
The New Zealand Dollar (NZD) remains steady around 0.5675 against the US Dollar (USD) as traders hold off on reacting to the upcoming summit between US President Donald Trump and Chinese President Xi Jinping. The currency has only slightly risen above its lowest level since early July, which occurred the previous day. Investors are keeping a close eye on the summit, as it is expected to impact sentiment surrounding antipodean currencies, such as the Kiwi.
In the meantime, the US Dollar (USD) is experiencing a brief pause after a recent surge that reached a high not seen since July 29. This pause provides support for the NZD/USD pair. However, expectations of higher interest rates from the US Federal Reserve (Fed), coupled with ongoing geopolitical uncertainties, continue to favor the USD.
The Reserve Bank of New Zealand (RBNZ) has also expressed a cautious stance, suggesting that any significant recovery for the NZD may still be uncertain. With a 70% probability now present that the US central bank will raise interest rates again in October, investors are more confident about the Fed's tightening policy. In addition, the surge in oil prices has reignited inflation concerns, supporting the likelihood of further interest rate hikes by the Fed.
Iran's tensions with the United States have escalated once more, following Trump's recent warning to Iran during his UN General Assembly (UNGA) speech. Despite Iran's President Masoud Pezeshkian expressing willingness for a diplomatic solution to end the conflict, the geopolitical risk premium remains a concern. Consequently, the safe-haven USD continues to benefit, potentially limiting the gains of the NZD/USD pair.
As of now, a near-term bearish bias is observed for the NZD/USD pair, as it fell below the 0.5700 level overnight and may continue its downward trend towards the prior low near 0.5625. A potential recovery may face immediate resistance near the 0.5700 support level, where a short-covering rally could push prices towards the 0.5765 horizontal zone.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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