NZD/USD strengthens to near 0.6000 on dovish Fed comments and hopes of an Israel-Iran ceasefire

NZD/USD gathers strength to near 0.5995 in Tuesday’s early Asian session, adding 0.35% on the day.

Fed’s Bowman said the central bank should consider interest rate cuts soon.

Investors await Chair Powell’s semiannual testimonies and the US June Consumer Confidence report later on Tuesday.

The NZD/USD pair attracts some buyers to around 0.5995 during the early Asian session on Tuesday. The US Dollar (USD) softens against the New Zealand Dollar (NZD) due to dovish Fedspeak. Investors will keep an eye on Chair Powell’s semiannual testimonies and the US June Consumer Confidence report later on Tuesday.

Fed’s Vice Chair for Supervision Michelle Bowman, a well-known hawk, said on Monday that the US central bank should consider interest rate cuts soon, as risks to the job market may be on the rise and on rising expectations that Iran's response to the US bombing of some nuclear sites in Iran will be limited.

According to Reuters, traders raised bets on further rate cuts after Fed Governor Christopher Waller said on Friday that the Fed should consider reducing rates at its July meeting. The markets were pricing in 46 basis points (bps) of cuts this year before Waller's comments.

Fed’s Powell will testify before the US Congress on Tuesday and Wednesday. Any surprise hawkish comments from Fed policymakers could help limit the USD’s losses and create a headwind for the pair in the near term.

The stronger-than-expected New Zealand’s Q1 Gross Domestic Product (GDP) data released last week provides some support to the Kiwi against the USD. Traders expect the Reserve Bank of New Zealand (RBNZ) to deliver only one more rate cut in the current easing cycle, likely to be fully priced in by November.