NZD/USD loses ground as the US Dollar strengthens on safe-haven demand amid stalled US–Iran peace talks.
President Trump appears unlikely to accept Iran’s proposal to reopen the Strait of Hormuz.
The RBNZ may stay cautious or tighten policy to return inflation to the 2% midpoint.
NZD/USD depreciates after two days of gains, trading around 0.5890 during the European hours on Tuesday. The pair loses ground as the US Dollar (USD) advances due to increased safe-haven demand amid stalled United States (US)-Iran peace talks.
US President Donald Trump appears unlikely to accept Iran’s proposal to end its closure of the Strait of Hormuz. Meanwhile, Marco Rubio signaled that any deal excluding Iran’s nuclear program is unlikely to be considered. Iran proposed reopening Hormuz if the US lifts its blockade and ends the war, while postponing nuclear discussions.
The Greenback also strengthens on rising expectations of prolonged higher rates from the Federal Reserve. The Fed is widely expected to hold rates steady at Wednesday’s April meeting, maintaining the federal funds target range at 3.50%–3.75% for a third consecutive pause. Fed nominee Kevin Warsh has emphasized policy independence, even as markets continue to price in a more aggressive rate-cutting path ahead.
The Reserve Bank of New Zealand (RBNZ) is likely to stay cautious or consider tightening to return inflation to the 2% midpoint amid persistent price pressures. Markets are pricing in a rate hike from the Reserve Bank of New Zealand in May following a hot inflation report for the first quarter, with price pressures expected to intensify further in the second quarter as the full impact of higher energy costs feeds into the data.
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