New Zealand Dollar advances on RBNZ hawkish outlook

• NZD/USD rises as the New Zealand Dollar gains on expectations of a September RBNZ interest rate hike.
• The US Dollar may struggle as US Treasury intervention works to stabilize domestic bond markets and cap yields.
• US-Iran geopolitical tensions intensify within the critical Strait of Hormuz.

NZD/USD extends its gains for the second successive day, trading around 0.5950 during the European hours on Thursday. The pair appreciates as the New Zealand Dollar (NZD) gains on expectations of another rate hike from the Reserve Bank of New Zealand (RBNZ) in September.

NZD trades above average as BNY questions pricing for further RBNZ hikes

Strategists at BNY observe that the Kiwi “is now trading slightly above the rolling 12-month average,” but they remain unconvinced by prevailing rate market assumptions. The bank notes that “we continue to doubt the current market pricing of interest rates expectations, where two more Reserve Bank of New Zealand (RBNZ) hikes are expected by year-end.” While acknowledging that “domestic activity remains robust,” BNY argues that “inflation expectations remain relatively well-anchored,” tempering the case for additional tightening despite the currency’s firm tone.

The NZD/USD pair holds ground as the US Dollar (USD) may face challenges amid the US Treasury Department's decision to stabilize domestic bond markets. To curb surging yields and alleviate market liquidity concerns, the Treasury announced plans to at least double its buyback operations for long-dated securities maturing in 10 to 30 years. This increased intervention aims to cap long-term borrowing costs and enhance overall global US Dollar liquidity, which could ultimately exert downside pressure on the currency moving forward.

However, the Greenback may receive safe-haven support from geopolitical friction in the Strait of Hormuz, where tensions between the US and Iran have intensified. While former President Donald Trump noted that oil transit continues and expressed openness to negotiations with Tehran, elevated risk aversion continues to favor the US currency.

Technical Analysis:

In the daily chart, NZD/USD trades at 0.5950, maintaining a bullish near-term bias as spot holds above both the nine-period and 50-period Exponential Moving Averages (EMAs). The pair has extended its recovery from last week’s lows, while the 14-day Relative Strength Index (RSI) at 66.23 approaches overbought territory, hinting that upside momentum is strong but could become stretched if buyers continue to chase highs.

On the downside, initial support is seen at the short-term nine-period EMA near 0.5901, with the broader bullish structure reinforced by the 50-period EMA at 0.5838 further below. On the topside, momentum remains constructive as long as RSI stays elevated. However, its proximity to the overbought band suggests that gains from the current 0.5950 area may increasingly face profit-taking rather than clear-cut technical resistance.

(The technical analysis of this story was written with the help of an AI tool. Know more.)