NZD/USD trades around 0.5835 on Tuesday at the time of writing, down 0.65% on the day as the New Zealand Dollar (NZD) faces renewed selling pressure against the US Dollar (USD).
Despite encouraging signs surrounding discussions between Washington and Tehran, the Kiwi is failing to benefit from an improvement in market sentiment
Markets are closely monitoring the latest comments from United States (US) President Donald Trump, who said there is a “very good chance” that a deal with Iran could be reached following what he described as positive progress in negotiations. Trump also stated that he had suspended an immediate military action to allow more room for diplomatic discussions, while maintaining the possibility of a large-scale intervention if no acceptable agreement is reached. However, investors remain cautious about the prospect of a lasting resolution to tensions.
Ongoing disagreements over Iran’s nuclear program and reports of explosions on Iran’s Qeshm Island continue to fuel geopolitical uncertainty, supporting demand for the US Dollar. Meanwhile, higher Oil prices continue to fuel global inflation expectations and reinforce expectations of a more restrictive monetary policy stance from the Federal Reserve (Fed). Markets have gradually scaled back expectations for monetary easing this year, providing additional support to the Greenback.