Geopolitical risks lift the USD as traders price a 40.1% chance of a Fed 25 basis points hike by year-end.
NZD/USD traded flat near 0.5830 in Asian hours, pressured by safe-haven demand for the USD. Escalating US-Iran tensions drove risk aversion after President Trump threatened military strikes within days.
Oil prices surged on war fears, reinforcing expectations the Fed may keep rates higher for longer. The CME FedWatch tool shows a 40.1% probability of a 25 basis points hike by December. Philadelphia Fed President Anna Paulson called current policy mildly restrictive, balancing inflation control and labor stability.
Iran vowed to respond firmly to any US aggression, adding to market uncertainty. Energy-driven inflation risks could further delay Fed easing.