The New Zealand Dollar declines for a third straight session as Federal Reserve tightening expectations lift the US Dollar to multi-month highs.
NZD/USD dropped 0.28% to 0.5740 on Friday, extending its decline to a third consecutive day and trading near its lowest levels since April. The US Dollar strengthened as markets priced in a more restrictive Federal Reserve policy stance, with policymakers now projecting the Federal Funds Rate to reach 3.8% by year-end, up from 3.4% in March forecasts.
The pair’s decline reflects broader USD strength amid expectations of another rate hike in the coming months. While a temporary ceasefire between Israel and Hezbollah eased geopolitical tensions slightly, its impact on currency markets remained limited as investors focused on monetary policy divergence.
Geopolitical risks persisted despite the ceasefire, with US officials canceling a planned diplomatic trip to Iran. The cautious sentiment kept demand for the USD elevated, overshadowing modest improvements in risk appetite.