Geopolitical de-escalation and lower Fed rate-hike bets weigh on the USD, supporting the NZD/USD pair ahead of the FOMC decision.
The NZD/USD pair edges higher early Monday, trading near 0.5800 as a softer USD provides support. A pause in US-Iran strikes after 13 consecutive nights of conflict has fueled optimism for a diplomatic resolution, reducing demand for the safe-haven USD.
US Treasury yields retreat modestly, reflecting diminished Fed rate-hike expectations amid easing inflation concerns. Crude oil prices also fall sharply, further tempering inflationary pressures. Traders remain cautious ahead of the Federal Reserve’s two-day policy meeting, which concludes Wednesday with rates widely expected to hold steady.
Market focus shifts to the Fed’s forward guidance, which will shape USD sentiment. Developments in the Middle East will also influence risk appetite and currency movements in the near term.