NZD/USD Inches Higher To Near 0.5900 As US-Iran Tensions Lift US Dollar

• NZD/USD gains as the US Dollar rebounds amid uncertainty over US–Iran peace negotiations.

• Iran warns it will “respond harshly” and cautions the US against entering the Strait of Hormuz.

• RBNZ board member Prasanna Gai said pre-emptive tightening needs strong synchronization and active coordination mechanisms.

NZD/USD holds ground after experiencing volatility, trading around 0.5900 during the European hours on Monday. The pair gains ground as the US Dollar (USD) has recovered its daily losses and is extending its gains amid uncertainty surrounding the United States (US)–Iran peace negotiations.

Iran’s armed forces said the country will “respond harshly” and warned the US against entering the Strait of Hormuz. The Iranian army also said all commercial ships and oil tankers must refrain from movement through the Strait of Hormuz without coordination with the Iranian military. Aggressive actions by the US would only “complicate the current situation” and further endanger the security of vessels. An Iranian official also warned earlier that US interference in Hormuz would be considered a violation of the ceasefire, adding that the Strait of Hormuz and the Persian Gulf are not a place for rhetoric.

President Donald Trump said on Sunday that the United States will begin guiding neutral ships stranded in the Persian Gulf out through the Strait of Hormuz starting Monday. The initiative is aimed at helping civilian vessels from non-aligned countries exit the contested waterway and resume normal operations.

Reserve Bank of New Zealand (RBNZ) board member Prasanna Gai said on Monday that pre-emptive tightening requires strong synchronization and an active coordination mechanism, adding that conditions justify the look-through approach recommended by the conventional framework.