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New Zealand Dollar stalls below 0.5900 as US Dollar regains safe-haven appeal

  • NZD/USD trades around 0.5895 on Monday, virtually unchanged on the day.
  • Middle East tensions support the US Dollar despite signs of weakness in the labor market.
  • The New Zealand central bank’s hawkish stance could limit Kiwi losses ahead of US inflation data.

NZD/USD trades around 0.5895 on Monday at the time of writing, virtually unchanged on the day. The pair consolidates below the 0.5900 level after retreating from its recent monthly high, as the US Dollar (USD) recovers some of the losses registered in the wake of disappointing United States (US) employment data.

The Nonfarm Payrolls (NFP) report released on Friday showed that the US economy unexpectedly lost 23K jobs in July. The previous month’s figure was also revised sharply lower to just 20K job additions from the 57K initially reported. The data points to a cooling labor market and initially weighed on the US Dollar by weakening the case for monetary tightening from the Federal Reserve (Fed).

However, the bearish reaction in the US Dollar fades as geopolitical tensions in the Middle East revive demand for safe-haven assets. Uncertainty surrounding the Strait of Hormuz remains elevated, while fresh attacks by Iran-backed Houthi militants against Saudi energy infrastructure keep concerns over energy supplies alive.

At the same time, higher Oil prices are reviving inflation concerns in the United States (US). Investors fear that energy-driven inflation could force the Fed to keep monetary policy restrictive for longer or even raise interest rates again. Expectations of tighter US monetary policy also help keep US Treasury bond yields elevated, providing additional support to the Greenback.

The international backdrop is also weighing on the New Zealand Dollar (NZD). Data released over the weekend showed that China’s annual Consumer Price Index (CPI) slowed to a six-month low in July, while the Producer Price Index (PPI) eased more sharply than expected. Weaker inflation in China fuels concerns about the world’s second-largest economy and weighs on antipodean currencies, including the Kiwi.

The downside in NZD/USD remains limited, however, by the hawkish stance of the Reserve Bank of New Zealand (RBNZ). The New Zealand central bank maintains a sufficiently restrictive bias to support the New Zealand Dollar and contain bearish pressure on the pair for now.

Investors now turn their attention to US inflation data due this week. The figures could provide fresh clues about the Fed’s interest-rate path as markets weigh a cooling labor market against the risk of renewed energy-driven inflation. Developments in the Middle East are also likely to remain an important driver of the US Dollar and, consequently, NZD/USD.

Chart Analysis NZD/USD

NZD/USD technical analysis

In the one-hour chart, NZD/USD trades at 0.5895, holding a modest bullish bias as it consolidates above the 100-period simple moving average (SMA) near 0.5879 and the 200-period SMA around 0.5863. The pair is grinding higher toward the horizontal resistance at 0.5909, while the Relative Strength Index (RSI) around 61 suggests firm but not overextended upside momentum, keeping buyers in control as long as price stays above the underlying moving average floor.

On the downside, immediate support is seen at the 100-period SMA around 0.5879, ahead of the 200-period SMA near 0.5863 and the horizontal level at 0.5860, which together define a broader demand band protecting the recent recovery. On the topside, a break above resistance at 0.5909 would open the door for a continuation of the advance, whereas repeated failure there would risk a pullback back toward the clustered supports below.

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USD/CHF Price Forecast: Struggles below 0.8100 as bears eye 50-SMA pivotal support

  • USD/CHF trades with a negative bias for the second straight day, though it lacks bearish conviction.
  • The disappointing US NFP tempered Fed-hike bets, undermining the USD and weighing on the pair.
  • The technical setup seems tilted in favor of bearish traders and backs the case for a further decline.

The USD/CHF pair struggles to attract any meaningful buyers and remains on the back foot below the 0.8100 mark through the first half of the European session on Monday.

Friday’s disappointing US Nonfarm Payrolls (NFP) further tempered bets of an immediate interest rate hike by the US Federal Reserve (Fed), which, in turn, is seen undermining the US Dollar (USD) and capping the USD/CHF pair. Investors, however, are still pricing in the possibility that the US central bank will raise borrowing costs by the end of this year amid inflation risks stemming from energy supply disruptions.

Apart from this, persistent geopolitical uncertainties might hold back traders from placing aggressive bearish bets on the safe-haven USD and contribute to limiting losses for the USD/CHF pair. The market focus now shifts to the release of the US inflation figures, due this week. The crucial data will be looked for fresh cues about the Fed’s future policy path, which, in turn, will play a key role in influencing the USD demand.

From a technical perspective, the USD/CHF pair is holding below the 23.6% Fibonacci retracement level of the May-July rally, albeit bears await a break below the 50-day Simple Moving Average (SMA) before placing fresh bets. Meanwhile, the Relative Strength Index (RSI) hovers just below the 50 line and the Moving Average Convergence Divergence (MACD) remains slightly negative, suggesting upside momentum is tentative.

Hence, a break below the 50-day SMA will be seen as a key trigger for USD/CHF bears and pave the way for a decline to a dense Fibo. support band between the 38.2% retracement at 0.8037 and the 61.8% level at 0.7932 ahead of structural floors at 0.7857 and 0.7761. On the topside, initial resistance comes at the 23.6% Fibo. retracement at 0.8103, and a break above this barrier would expose the next upside objective at the cycle high zone around 0.8208.

USD/CHF daily chart

Chart Analysis USD/CHF
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Euro advances against Canadian Dollar as Eurozone Investor Confidence rises in August

  • EUR/CAD holds ground as Eurozone’s Sentix Investor Confidence rises in August for the first time in five months.
  • Higher oil prices could lend support to the commodity-linked Canadian Dollar.
  • Crude oil prices rebound due to uncertainty over reopening the Strait of Hormuz.

EUR/CAD inches higher after three days of losses, trading around 1.6120 during the European hours on Monday. The currency cross is holding its ground, driven primarily by a resilient Euro (EUR) following positive Eurozone economic sentiment.

The Eurozone’s Sentix Investor Confidence data, a key indicator of investor morale, rose to 0.9 in August, marking its first positive reading in five months. Investor sentiment had previously dropped into negative territory in March with the onset of the Middle East conflict, though it showed signs of recovery by reaching -3.1 in July.

The upside potential for the EUR/CAD pair could be restrained by support for the commodity-linked Canadian Dollar (CAD) amid higher oil prices. West Texas Intermediate remains in the positive territory and is trading around $77.20 per barrel at the time of writing.

Crude oil prices rebounded as persistent uncertainty surrounds efforts to reopen the critical Strait of Hormuz. Over the weekend, Iran stated that talks with Oman to establish a safe shipping route through the strategic waterway are nearing an agreement, though Tehran cautioned that any deal would not result in an immediate reopening.

Meanwhile, regional security remains fragile; Iran-backed Houthi militants in Yemen claimed a recent attack on Saudi Arabia’s Jazan refinery, and a tanker operated by the Abu Dhabi National Oil Co. came under attack in the Strait.

Oil volatility keeps Middle East risks in focus for credit markets

HSBC Asset Management observes that a “recent pick-up in oil price volatility has kept the Middle East conflict front of mind for markets,” noting that while crude remains “the most visible channel,” the implications run deeper for corporate borrowers. The bank stresses that for credit investors “a big question” is not just the headline move in energy prices, but “how and where the disruption could lead to supply shortages across industries and supply chains,” particularly in sectors reliant on petrochemicals, fertilisers and industrial gases.

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Euro holds gains near seven-week highs as economic sentiment improves

  • EUR/USD holds gains at 1.1560, consolidating near seven-week highs.
  • Eurozone Sentix Investors Sentiment Index rose to a six-month high in August.
  • The US Dollar remains depressed as Fed tightening hopes ebb.

The Euro (EUR) ticks higher against a softer US Dollar (USD) on Monday, with the EUR/USD pair trading at the 1.1560 area at the time of writing, consolidating gains a few pips below seven-week highs at 1.1773. Fading hopes that the US Federal Reserve (Fed) will hike interest rates in September are hurting the Greenback, while, in Europe, bright investors’ confidence figures have provided additional support to the Euro.

Data released by the Sentix research institute on Monday revealed that investors’ confidence in the Eurozone economy improved sharply in August, reaching positive levels, with a 0.9 reading, for the first time since February. These numbers confirm a steady recovery, from -.3.1 in July and -13.4 in June.

The greatest improvement has been seen at the current economic conditions sub-Index, which rose by 6.8 points, while the economic expectations improved by a more moderate 1.0. The expectations about the German economy rose by 2.5 points to 6.0, also the highest level since February, while the Global Aggregate rose by 1.4 points, to 14.7, suggesting that economic recovery expectations are broad-based.

The Euro is drawing some support from a weaker US Dollar, as the negative surprise posted by the US Nonfarm Payrolls data has dampened hopes of immediate Federal Reserve (Fed) rate hikes further. This is offsetting concerns about the economic consequences of higher Oil prices for now, as the status of the Strait of Hormuz remains highly uncertain with sea traffic through the key waterway practically blocked.

US CPI data will be the highlight of the week

The US calendar is thin on Monday, and the focus is on the US Consumer Price Index (CPI) figures for July, due next Wednesday, for a better assessment of the Fed’s near-term rate path. The market consensus points to a mild slowdown of consumer prices to a 3.4% year-on-year rate, from 3.5% in June. The Core CPI is also expected to have eased, to a 2.5% yearly growth, from 2.6% in the previous month.

Analysts at ING see the EUR/USD “firmly dominated by the USD side of the equation,” with upcoming US inflation data set to play a pivotal role. In their view, “a softer US CPI print would increase the chances of a break above 1.160 already this week,” with the “next important resistance beyond that” identified as “the 200-day moving average at 1.1630.”

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British Pound rallies to over one-week high as fiscal woes and rate gap hammer Yen

  • GBP/JPY gains strong positive traction at the start of a new week amid a broadly weaker JPY.
  • Japan’s fiscal concerns offset the recent intervention and exert heavy pressure on the JPY.
  • The wide UK-Japan rate gap keeps the JPY carry trade active and further supports spot prices.

The GBP/JPY cross catches aggressive bids at the start of a new week and builds on its strong recovery move from the vicinity of mid-209.00s, or the lowest level since early March touched last Monday. The momentum lifts spot prices to an over one-week high, around the 214.00 neighborhood, during the early part of the European session and is sponsored by a broadly weaker Japanese Yen (JPY).

Following a brief surge driven by a joint US-Japan intervention, the JPY resumes its downtrend amid concerns about Japan’s worsening fiscal conditions stemming from Prime Minister Sanae Takaichi’s aggressive economic stimulus and tax cuts. In fact, Japan’s ruling Liberal Democratic Party (LDP) backed a proposal to cut the food consumption tax from 8% to 1% for two years starting in April 2027. Adding to this, the Japanese government proposed roughly ¥600 billion a year in cash transfers targeted at low- and middle-income households as part of a relief package.

Furthermore, the wide interest rate gaps between Japan and other major economies, including the UK, keep the so-called carry trade active and exert additional pressure on the JPY. The Bank of Japan (BoJ) lifted the short-term policy rate in June to 1.00%, or the highest since 1995, while the Bank of England’s (BoE) base rate is at 3.75%. This leaves a gap of around 275 basis points (bps), which, in turn, favors GBP/JPY bulls. Meanwhile, the strong intraday move up seems rather unaffected by a relatively hawkish BoJ Summary of Opinions from the July 30-31 meeting.

Market participants now look to this week’s release of the quarterly UK GDP report, which will play a key role in influencing the British Pound (GBP). The aforementioned fundamental backdrop, however, suggests that the recent corrective decline from the 219.60 region, or a multi-year top touched in July, has run its course and backs the case for a further near-term appreciating move for the GBP/JPY cross.

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Offshore Yuan Retreats After Inflation Data

The offshore yuan weakened to around 6.74 per dollar on Monday, retreating from a more than three-year high reached in the previous session, as softer inflation data underscored persistent weakness in domestic demand. Annual consumer inflation eased to a six-month low of 0.5% in July, reflecting declines in food prices and slower growth in non-food costs. Producer price inflation also moderated to 3.5% from 4.1%, marking its first slowdown since returning to positive territory in March amid an oil-price surge triggered by Middle East tensions. Meanwhile, the Political Bureau of the Communist Party of China Central Committee recently pledged more proactive and effective macroeconomic policies, including the faster deployment of fiscal funds and bond proceeds, while continuing to support large-scale equipment upgrades and consumer goods trade-in programs. It also emphasized the need to boost domestic demand as consumer spending remains subdued despite solid exports and industrial output.

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South Korean Won Eases From Over 10-Month High

The South Korean won eased to around 1,415 per dollar, pulling back slightly from a recent over ten-month high, as renewed uncertainty over the Strait of Hormuz weighed on the currency. Iran denied holding direct talks with Washington over reopening the waterway, casting doubt on a near-term deal and keeping oil prices elevated, raising concerns over import costs and inflation in South Korea. Meanwhile, strong semiconductor exports and continued dollar selling by exporters provided support, with July exports rising nearly 63% year-on-year to $98.89 billion and semiconductor shipments surging 179%. Expectations of foreign exchange intervention by South Korean authorities are also helping limit renewed won weakness and keep the currency near its strongest level since October 2025. At the same time, investors are monitoring this week’s US inflation data for further clues on the Federal Reserve’s policy outlook and the dollar’s direction.

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New Zealand Dollar drifts lower as USD recovers from post-NFP lows amid Mideast jitters

  • NZD/USD meets with a fresh supply on Monday as geopolitical risks underpin the USD.
  • Higher oil prices fuel inflation fears and Fed hike bets, which further benefit the buck.
  • The hawkish RBNZ could support the NZD and limit losses ahead of US inflation figures.

The NZD/USD pair is seen extending Friday’s late pullback from the vicinity of the monthly peak – levels just above the 0.5900 mark – and drifting lower at the start of a new week. Spot prices, however, remain confined in a familiar range held over the past week or so and currently trade around the 0.5880 region, down 0.20% for the day, amid a modest US Dollar (USD) strength.

The immediate market reaction to the disappointing release of the US Nonfarm Payrolls (NFP) report on Friday seems to have faded as the geopolitical risk premium offers some support to the safe-haven USD. Meanwhile, the uncertainty over the Strait of Hormuz and fresh attacks by Iran-backed Houthi militants against Saudi energy infrastructure act as a tailwind for crude oil prices. This continues to fuel inflation fears and bets for at least one interest rate hike by the US Federal Reserve (Fed) in 2026.

Meanwhile, data released over the weekend showed that China’s annual consumer inflation rate slowed to a six-month low and producer price inflation eased more sharply than expected in July. This turns out to be another factor weighing on antipodean currencies, including the New Zealand Dollar (NZD), and contributing to the NZD/USD pair’s slide. However, the Reserve Bank of New Zealand’s (RBNZ) hawkish tilt could support the New Zealand Dollar (NZD) and help limit deeper losses for the pair.

Traders might also opt to wait for the latest US inflation figures, due this week, for more cues about the Fed’s future policy path. The outlook, along with further developments surrounding the Middle East crisis, will drive the USD demand and provide some impetus to the NZD/USD pair. In the meantime, the aforementioned mixed fundamental backdrop makes it prudent to wait for a breakdown through a one-week-old trading range support near the 0.5860 region before placing aggressive bearish bets.

NZD/USD 4-hour chart

Chart Analysis NZD/USD

Technical Analysis

With the NZD/USD pair hovers in a tight range and lacks a clear directional edge, leaving the near-term bias broadly neutral around the 0.59 handle. The 0.5865-0.5860 region should act as a short-term pivot and a sustained break below would be needed to bac the case for any further near-term depreciating move.