NZD/USD struggles to extend gains as USD demand persists

• Kiwi capped as the US Dollar holds firm on safe-haven flows tied to ongoing tensions around the Strait of Hormuz.
• Softer US yields are capping gains in NZD/USD, while weakening risk appetite continues to restrict further upside.
• Oil-driven inflation fears support the greenback, while markets scale back bets on Fed easing.

The NZD/USD pair is trading with a cautious tone around the 0.5910 region on Thursday, as the US Dollar (USD) maintains a firm footing despite a modest pullback in US Treasury yields.

The Greenback continues to benefit from safe-haven demand, with markets remaining on edge following fresh developments in the Middle East. Although a ceasefire extension between the United States and Iran initially provided some relief, renewed disruptions in the Strait of Hormuz and rising Oil prices have kept risk sentiment fragile, limiting demand for higher-beta currencies like the New Zealand Dollar (NZD).

At the same time, US yields drifting lower have prevented a more aggressive upside in the USD, allowing NZD/USD to stabilize after recent losses. However, this support has proven shallow, as investors continue to reassess the outlook for Federal Reserve policy. Expectations for rate cuts remain limited, with markets still pricing a relatively cautious easing cycle.

Short-term technical analysis:

On the four-hour chart, NZD/USD trades at 0.5907, holding a constructive near-term bias as it sits above both the 20-period Simple Moving Average (SMA) around 0.5897 and the 100-period SMA near 0.5825. The clustering of short- and medium-term SMAs below spot suggests underlying demand, while the Relative Strength Index (RSI) around 54 signals modest bullish momentum without venturing into overbought territory.

On the downside, initial support emerges at 0.5902, ahead of 0.5897, a level reinforced by the nearby 20-period SMA, with the 100-period SMA down at 0.5825 marking a more distant floor. On the topside, immediate resistance is seen at 0.5921, followed by 0.5924; a break above these hurdles would open the way toward 0.5965.

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