The New Zealand Dollar (NZD) declined for the third consecutive day against the US Dollar (USD) on Wednesday, dropping below the 0.5900 level and marking the weakest performance among major currencies. This downward movement was driven by heightened geopolitical tensions, including US military action targeting Iran’s Qeshm Island following attacks that caused significant damage and injuries at Kuwait’s International Airport. Additionally, reports from Al Jazeera of an Israeli attack near Beirut have further undermined risk appetite and put pressure on the fragile ceasefire in the region [1].
These geopolitical concerns have overshadowed the positive impact of a strong Chinese Services Purchasing Managers’ Index (PMI) released earlier in the day. In the US, robust manufacturing activity and job opening data from previous days have reinforced expectations of further Federal Reserve (Fed) rate hikes later this year, providing additional support to the US Dollar and intensifying the downward pressure on the NZD/USD pair [1].
Technically, NZD/USD traded at 0.5896 after breaking support at the 0.5910 area, confirming a bearish near-term bias. The 4-hour Relative Strength Index (RSI) fell below 40, and the Moving Average Convergence Divergence (MACD) moved deeper into negative territory, both indicating growing downside momentum. Immediate support is identified at the May 28 low near 0.5865, with further support between 0.5815 and 0.5830, and a more significant level at the April 12 low around 0.5700. On the upside, resistance is expected at the previous support area just above 0.5800 and at Tuesday's high near 0.5850, ahead of the May and June highs at 0.5990 [1].
A currency performance table showed the New Zealand Dollar was the weakest among major currencies, declining 0.50% against the US Dollar, 0.33% against the Euro, and 0.35% against the British Pound. The NZD was strongest against the Swiss Franc, with a decline of only 0.22% [1].
CONCLUSION
The NZD/USD pair has come under significant pressure due to escalating geopolitical risks and reinforced expectations of US Fed rate hikes. With technical indicators pointing to further downside and the Kiwi underperforming its peers, market sentiment remains bearish for the New Zealand Dollar in the near term.