New Zealand Dollar defies stronger US Dollar as RBNZ rate hike bets offer support

• NZD/USD advances modestly on Tuesday, even as safe-haven demand supports the US Dollar.
• US-Iran tensions keep uncertainty elevated over the Middle East conflict and the Strait of Hormuz.
• Elevated inflation in New Zealand fuels expectations of a September rate hike and supports the Kiwi.

NZD/USD edges slightly higher on Tuesday and trades around 0.5965 at the time of writing, up 0.08% on the day. The pair withstands a firmer US Dollar (USD), which benefits from increased safe-haven demand as geopolitical tensions between the United States (US) and Iran remain at the center of market attention.

The US is stepping up economic pressure on Iran and its international trading partners. US Treasury Secretary Scott Bessent has outlined a strategy aimed at further isolating Tehran from the global economy, including sanctions targeting countries and entities that continue to trade with Iran.

US President Donald Trump has also warned that foreign entities have a limited period to end their commercial ties with Tehran or face US financial sanctions. However, the campaign is keeping markets uncertain, with investors questioning whether it will help bring the conflict closer to a resolution or instead prolong hostilities and delay the reopening of the Strait of Hormuz.

The resulting safe-haven demand supports the US Dollar and limits the advance in NZD/USD. However, the Greenback also faces headwinds after the US Treasury's decision to expand its buyback operations for longer-dated bonds. Scott Bessent could deploy up to $1 trillion from the Treasury General Account to finance these operations, a prospect that could affect US market liquidity and bond yields.

On the economic front, the latest US private employment data points to a modest improvement. The four-week average ADP Employment Change stands at 11.75K jobs per week for the period ending August 8, up from 9.5K previously. The acceleration suggests some recovery in private-sector hiring without triggering a significant move in the US Dollar.

Meanwhile, the New Zealand Dollar (NZD) remains supported by monetary policy expectations. Persistently elevated inflation reinforces the possibility that the Reserve Bank of New Zealand (RBNZ) could raise interest rates again in September, helping limit downside pressure on the Kiwi despite a geopolitical environment that remains unfavorable for risk-sensitive assets.

Investors now turn their attention to several major events in the United States. Consumer confidence data is due on Tuesday, followed by the Personal Consumption Expenditures (PCE) Price Index on Wednesday. Federal Reserve (Fed) Chair Kevin Warsh is then scheduled to speak on Friday at the annual Jackson Hole symposium, an event that could provide fresh clues about the path of US monetary policy.

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5964, holding a mild bullish bias as it consolidates above the 100-period simple moving average (SMA) at 0.5956 and the 200-period SMA at 0.5918. The pair has pushed through a recently broken downward trend-line around 0.5959, which now acts as nearby support, while the Relative Strength Index (RSI) around 55 suggests modest positive momentum rather than an overstretched rally.

On the downside, initial support is seen near the broken trend-line zone around 0.5959, followed by the 100-period SMA at 0.5956 and the horizontal floor at 0.5940, ahead of stronger backing from the 200-period SMA at 0.5918. On the topside, immediate resistance is located at the horizontal barrier around 0.5989, and a clear break above this level would open the way for a further recovery toward higher highs in the short term.

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