The US Dollar (USD) has strengthened against major currencies, with the New Zealand Dollar (NZD), British Pound (GBP), and Euro (EUR) all coming under pressure due to a combination of geopolitical tensions, political uncertainty, and shifting monetary policy expectations. The NZD/USD pair traded at 0.5730 on Monday, nearing its year-to-date low of 0.5681, as ongoing Middle East conflict and the closure of the Strait of Hormuz by Tehran weighed on risk appetite. Despite some progress in US-Iran negotiations, the situation remains tense, with technical indicators for NZD/USD reinforcing a bearish outlook and suggesting further downside toward the November 2025 low in the 0.5580 area [1].
The GBP/USD pair also faced downward pressure, trading near 1.3218 and down 0.1% during the early European session. UK political uncertainty intensified after US President Donald Trump publicly stated that Prime Minister Keir Starmer could resign over failures on immigration and energy policy. Calls from Labour lawmakers for Starmer to step down have increased, and a Reuters report indicated that Starmer could decide as early as Monday whether to remain in office or begin the process of stepping down. Additionally, the US Dollar's strength was bolstered by increased expectations of two Federal Reserve interest rate hikes this year, with the CME FedWatch tool showing odds at 58.5%, up sharply from 17.1% a week ago. Technical analysis for GBP/USD points to a bearish near-term tone, with potential support at 1.3096 and further downside toward the psychological 1.3000 level if declines continue [2].
The Euro (EUR) has also been under pressure against the US Dollar, with EUR/USD briefly dipping to 1.1416 before rebounding to 1.1468. Analysts from United Overseas Bank (UOB) expect short-term consolidation between 1.1435 and 1.1495 as oversold conditions unwind, but maintain a bearish bias toward 1.1410. They warn that a break below the 1.1390/1.1410 support zone could open the way to 1.1210. Only a breach of 1.1530 would indicate that further declines are unlikely in the near term [3].
Across all three major currency pairs, the dominant theme is the strength of the US Dollar, driven by geopolitical risks, political instability in the UK, and hawkish expectations for US monetary policy. Technical indicators and analyst commentary from all sources point to continued downside risks for NZD, GBP, and EUR against the USD.
CONCLUSION
The US Dollar's broad-based strength is exerting significant downward pressure on the New Zealand Dollar, British Pound, and Euro, fueled by geopolitical tensions, UK political uncertainty, and expectations of further Fed rate hikes. Technical and fundamental signals from all sources suggest that the bearish momentum for these currencies may persist in the near term. Market participants are likely to remain cautious as they monitor developments in global politics and central bank policy.