Escalating US-Iran tensions and Fed rate hike bets lift the USD Index near late-June highs, capping the kiwi dollar’s gains.
The NZD/USD pair edged higher in Asian trading Friday, recovering from a 1.5-week low near 0.5760 but failing to breach 0.5800. The move lacked momentum as the USD strengthened broadly, with the DXY index hovering near its June 26 peak.
Rising US-Iran tensions and hawkish Fed expectations underpinned the greenback. The US military conducted its 13th consecutive night of strikes against Iran, while retaliatory attacks on US-linked assets in Kuwait, Bahrain, and Jordan fueled supply disruption fears. Crude oil prices climbed to a fresh high since June 11, stoking inflation concerns and reinforcing bets on a Fed rate hike by year-end.
New US tariffs on 99.4% of imports from key trading partners added to the dollar’s strength, limiting upside for the kiwi. The pair remains constrained by geopolitical risks and monetary policy divergence.