New Zealand Dollar jumps as falling US yields weigh on the USD

• NZD/USD rises nearly 1% on Wednesday, supported by the broad decline in the US Dollar.
• US Treasury yields fall sharply after the Treasury announces measures aimed at supporting liquidity in longer-dated securities.
• The New Zealand central bank’s hawkish stance also supports the Kiwi, while investors await the Fed Minutes.

NZD/USD rises sharply on Wednesday and trades around 0.5930 at the time of writing, up 0.96% on the day. The New Zealand Dollar (NZD) benefits primarily from broad weakness in the US Dollar (USD), as the sharp decline in US Treasury yields reduces the appeal of the Greenback.

The US 10-year Treasury yield falls to 4.651% after reaching 4.712% earlier in the day. The move follows a surprise announcement from the United States (US) Department of the Treasury, which plans to double the size of some buyback operations aimed at supporting liquidity in longer-dated securities.

The US Treasury says the size of buybacks of nominal coupon securities in the 10-year to 20-year and 20-year to 30-year sectors will increase from $2 billion to at least $4 billion per operation between September 9 and November 4. The decision comes after long-term borrowing costs recently increased amid concerns over government deficits, inflation and sovereign debt supply.

Falling US yields weigh directly on the Greenback by reducing the yield advantage of Dollar-denominated assets. The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, falls 0.81% on Wednesday and trades around 98.85 at the time of press, its lowest level since May 29.

On the monetary policy front, investors now await the Minutes of the latest Federal Open Market Committee (FOMC) meeting, due at 18:00 GMT on Wednesday. Markets will look for clues about the extent to which Federal Reserve (Fed) officials are still considering another interest-rate hike after Fed Chair Kevin Warsh refrained from providing clear guidance on the future path of monetary policy at his latest press conference.

Recent US employment and inflation data have reduced expectations of an imminent rate hike. However, inflation risks remain tilted to the upside due to energy-related concerns stemming from the US-Iran standoff over the Strait of Hormuz, leaving the possibility of further monetary tightening later this year open.

On the New Zealand side, the hawkish stance of the Reserve Bank of New Zealand (RBNZ) provides additional support to the Kiwi. The central bank stresses the need to withdraw some of its monetary policy support, benefiting the Kiwi and reinforcing the advance in NZD/USD as US yields and the Dollar decline simultaneously.

Investors are also monitoring Wednesday’s US 20-year Treasury bond auction. Strong demand could add to the decline in yields and keep pressure on the US Dollar, while the Fed Minutes are set to provide the next major catalyst for NZD/USD.

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5933, keeping a bullish near-term tone as it holds above the 100-hour simple moving average (SMA) at 0.5886 and the 200-hour SMA at 0.5880. The pair is extending gains above the intraday floor at 0.5926, though the Relative Strength Index (RSI) around 78 suggests overbought conditions that could slow the advance as price approaches nearby overhead levels.

On the downside, immediate support is seen at 0.5926, followed by the 0.5900 horizontal level, with the clustered 100-hour and 200-hour SMAs near 0.5886–0.5880 reinforcing a broader demand area ahead of 0.5860. On the topside, initial resistance is located at 0.5950, where a pause or corrective pullback would be likely if buyers hesitate in the overbought environment.

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