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NZD/USD weakens as Fed policy caution, Iran tensions support US Dollar

  • NZD/USD declines as investors remain cautious ahead of the Fed’s policy decision.
  • Expected pause in US rates supports the US Dollar in a higher-for-longer environment.
  • Iran-related tensions and Hormuz Strait risks weigh on sentiment and limit Kiwi upside.

NZD/USD trades lower around 0.5840 on Wednesday at the time of writing, down 0.76% on the day, as markets adopt a wait-and-see stance ahead of the Federal Reserve (Fed) monetary policy decision later in the day.

The NZD/USD pair remains under pressure as investors widely expect the Fed to keep interest rates unchanged within the 3.5%-3.75% range, marking a fourth consecutive hold. Focus now shifts to Fed Chair Jerome Powell’s press conference, which could offer clues on the future policy path, particularly as inflation continues to run above the 2% target.

A hawkish tone from the Federal Reserve (Fed), emphasizing persistent inflation risks, could support the US Dollar (USD) and add further downside pressure on NZD/USD in the near term. Conversely, any hints that policymakers remain open to rate cuts later this year might cap the Greenback’s strength, although it may not be enough to reverse the broader trend amid prevailing uncertainty.

On the political front, a potential leadership transition at the Fed is also drawing attention after Kevin Warsh was confirmed by the US Senate Banking Committee. He still needs full Senate approval to succeed Jerome Powell, whose term ends in May, adding another layer of uncertainty for markets.

Meanwhile, geopolitical tensions in the Middle East continue to weigh on market sentiment. Comments from US President Donald Trump regarding Iran and the potential extension of the Strait of Hormuz blockade are fueling concerns over global energy supply. The resulting rise in Oil prices is reinforcing inflationary pressures and supporting expectations of a prolonged higher-rate environment.

In this context, safe-haven demand for the US Dollar (USD) remains firm, putting pressure on risk-sensitive currencies such as the New Zealand Dollar (NZD). While any signs of easing tensions between the US and Iran could temporarily improve risk appetite, persistent uncertainty is likely to limit any meaningful recovery in the Kiwi in the near term.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.15%0.20%0.38%-0.00%0.69%0.78%0.09%
EUR-0.15%0.04%0.24%-0.16%0.53%0.65%-0.07%
GBP-0.20%-0.04%0.19%-0.21%0.47%0.59%-0.11%
JPY-0.38%-0.24%-0.19%-0.40%0.31%0.42%-0.25%
CAD0.00%0.16%0.21%0.40%0.71%0.80%0.10%
AUD-0.69%-0.53%-0.47%-0.31%-0.71%0.11%-0.63%
NZD-0.78%-0.65%-0.59%-0.42%-0.80%-0.11%-0.71%
CHF-0.09%0.07%0.11%0.25%-0.10%0.63%0.71%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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BREAKING: Bank of Canada keeps rates unchanged, USDCAD extends gains

Bank of Canada (BoC) Rate Decision:

  • Actual 2.25%
  • Forecast 2.25%
  • Previous 2.25%

The Bank of Canada maintained its policy interest rate at 2.25%, a level held since October. The Governing Council decided to “look through” the immediate inflationary impact of the Middle East war. However, policy remains “nimble,” with potential for rate hikes if energy price shocks lead to persistent, generalized inflation. Economic projections:

  • Inflation Outlook : March CPI inflation rose to 2.4% from 1.8% in February, driven by surging gasoline prices. Inflation is forecast to peak at 3% in April before returning to the 2% target in early 2027.
  • Economic Growth Projections : GDP growth is projected at 1.2% in 2026, rising to 1.7% by 2028 as trade and investment gradually recover. While consumption and government spending support the economy, US tariffs and trade uncertainty—specifically the CUSMA review—weigh on exports. Canada’s net oil exporter status provides some relative resilience.
  • Labor Market and Risks : The labor market is soft, with unemployment between 6.5% and 7%. Key risks include new US trade restrictions, which could trigger rate cuts, or persistent energy price pressures that might necessitate consecutive rate increases. Productivity is seeing an early boost from businesses adopting artificial intelligence technologies.

Source: xStation5

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USD/JPY nears the key 160.00 level ahead of the Fed rate decision

  • USD/JPY nudges higher on Wednesday and reaches the 159.75 area.
  • The US Dollar remains buoyant on cautious markets ahead of the Fed’s interest rate decision.
  • Japanese Finance Minister Katayama threatened “decisive action” against speculative market moves.

The US Dollar (USD) nudges higher for the second consecutive day against the Japanese Yen (JPY) on Wednesday, trading at 159.75 at the time of writing, with the key 160.00 level, considered a line in the sand for Tokyo intervention, coming closer.

The US Dollar keeps a moderate bullish trend against its main peers as investors brace for the outcome of the US Federal Reserve’s two-day monetary policy meeting, due later today. The bank will, all but certainly, leave its benchmark interest rates unchanged in the 3.50%-3.75% range, with no monetary policy changes foreseen by the market until well into 2027.

Wednesday’s is highly likely to be the latest meeting with Jerome Powell as chairman, as his term ends on May 15, and former Governor Kevin Warsh has been nominated as his replacement. It is still to be seen, however, whether Powell remains on the Board of Governors or, as US President Donald Trump demanded, leaves the central bank.

In Japan, the Bank of Japan (BoJ) stood pat on rates, as expected, on Tuesday, but Governor Kazuo Ueda reaffirmed their commitment to gradual monetary tightening. The positive impact on the Yen, however, was muted, as the comparatively low BoJ interest rates leave the Yen as the currency of choice for carry trade, consisting of borrowing low-yielding Yen to purchase higher-yielding currencies.

Japanese Finance Minister Satsuki Katayama warned Yen sellers before the BoJ decision on Tuesday, flagging a coordinated intervention with the US. Katayama said that Crude Oil volatility is spilling over the FX markets and affecting the broader economy, and assured that Japanese Authorities are ready to take decisive action against speculative activity.

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GBP/USD Price Trades sideways around 1.3500 ahead of Fed-BoE rate decisions

  • GBP/USD wobbles around 1.3500 as the US Dollar consolidates in the countdown to Fed-BoE policy announcements.
  • The Fed is expected to warn of upside inflation risks after leaving interest rates unchanged.
  • Investors expect the BoE to hold interest rates steady at 3.75%.

The GBP/USD pair is broadly sideways around 1.3500 during the European trading session on Wednesday. The Cable consolidates as investors await monetary policy announcements by the Federal Reserve (Fed) and the Bank of England (BoE).

The Fed is anticipated to leave interest rates unchanged in the range of 3.50%-3.75% in its monetary policy announcement at 18:00 GMT, according to the CME FedWatch tool. In the monetary policy statement, the Fed is expected to warn about de-anchored inflation projections and growing economic risks amid higher oil prices due to prolonged Strait of Hormuz closure.

Ahead of the Fed’s policy meeting, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% higher to near 98.70.

On Thursday, the BoE is expected to hold interest rates steady at 3.75%, with an 8-1 majority. In an event at the International Monetary Fund (IMF) this month, BoE Governor Andrew Bailey said the war has resulted in a “big negative shock” to the economy; however, there is no rush for any monetary policy adjustment.

GBP/USD technical analysis

GBP/USD trades flat at around 1.3500, holding a modest bullish bias as it sits above the 20-day Exponential Moving Average (EMA) at 1.3470 and the 38.2% Fibonacci retracement at 1.3432.

The Relative Strength Index (RSI) at 55.4 leans slightly positive, suggesting buyers retain the upper hand while upside traction remains gradual.

On the topside, immediate resistance is aligned at the 50.0% Fibonacci retracement at 1.3515, with further barriers at the 61.8% level at 1.3599, followed by 1.3718 and 1.3870. On the downside, initial support is seen at the 20-day EMA at 1.3470, ahead of the 38.2% retracement at 1.3432; a deeper pullback would expose the 23.6% level at 1.3328 and the structural floor near 1.3161.

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Trade of The Day – EUR/CHF

Facts:

  • The pair invalidated 1:1 structure at 0.9204
  • EURCHF is trading above the 100-period exponential moving average from D1 interval

Recommendation: Trade: Long EURCHF at market price Target: 0.9330, 0.9390 Stop: 0.9155

Opinion: Looking at EURCHF on the H4 interval, one can see a potential trend reversal. The pair managed to break above the 1:1 structure – according to the Overbalance strategy, such a situation heralds a bigger upward move. It seems that as long as the price sits above the 0.9204 support, continuation of the upward move is the base case scenario. In addition the pair sits above the 100-period moving average from the D1 interval. We recommend going long EURCHF at market price with two targets: 0.9330 and 0.9390. We also recommend placing a stop loss order at 0.9155. Source: xStation

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USD/CAD – Holds onto gains near 1.3700 in countdown to BoC-Fed policy

  • USD/CAD trades firmly near 1.3700 as the US Dollar gains ahead of the Fed’s monetary policy.
  • The Fed and the BoC are expected to hold interest rates steady.
  • Investors await fresh cues on the US inflation and the interest rate outlook.

The USD/CAD pair clings to Tuesday’s gains around 1.3690 during the European trading session on Wednesday. The Loonie pair reflects strength as the US Dollar (USD) trades higher ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT.

At the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 98.75.

Investors expect the Fed to leave interest rates unchanged in the range of 3.50%-3.75%, as elevated energy prices have de-anchored inflation projections globally. Market participants will pay close attention to the monetary policy statement and Fed Chair Jerome Powell’s speech to get fresh cues on inflation and the United States (US) interest rate outlook.

Ahead of the Fed’s policy, the Bank of Canada (BoC) will announce its monetary policy at 13:45 GMT, in which it is also expected to hold interest rates steady. Market participants will closely monitor remarks regarding the Canadian labor market outlook, with the Unemployment Rate remaining higher at 6.7%.

USD/CAD technical analysis

USD/CAD reflects strength at around 1.3690 as of writing. However, the price keeps a mildly bearish near-term tone as it remains below the 20-period Exponential Moving Average (EMA) at 1.3724.

The Relative Strength Index (RSI) near 44 suggests fading bullish momentum and hints that sellers are gaining incremental control while price remains capped by the overhead EMA.

On the topside, immediate resistance aligns with the 20-period EMA at 1.3724, and a daily close above this barrier would be needed to ease the current downside bias and reopen a push toward 1.3800. Looking down, initial support is seen at the former trend-line-based floor near 1.3593; a sustained break below that area would reinforce the developing bearish phase.

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USD/INR extends its advance as oil prices rise further

  • The Indian Rupee continues to underperform against the US Dollar amid rising oil prices.
  • US President Trump warns of extending the blockade on Iranian sea ports.
  • The Fed is expected to leave interest rates unchanged.

The Indian Rupee (INR) extends its decline against the US Dollar (USD) on Wednesday. The USD/INR pair rallies further to near 94.75, as oil prices have extended their advance, following comments from United States (US) officials on late Tuesday that President Donald Trump has instructed aides to prepare for an extended blockade of Iran, The Wall Street Journal (WSJ) reported.

At the press time, the WTI Oil price trades flat around $97.00 but gained sharply in the late Tuesday’s session to near $99.50, the highest level seen in almost three weeks.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high oil price environment.

Trump prefers squeezing oil flows from Iran than bombing its territory again

The WSJ report showed the US President Trump has stated that the continuation of the blockade of Iranian sea ports is a preferred measure to push Tehran on the back foot in negotiating terms for a permanent ceasefire than bombing Iranian territory again.

The continuous US blockade on Iran means the prolonged closure of the Strait of Hormuz, a vital passage for almost 20% of global energy supply.

FIIs keep offloading their stake in Indian stock market

Overseas investors have emerged as net sellers for the seventh straight trading day on Tuesday, and have offloaded their stake worth Rs. 20,395.08 crore. Foreign Institutional Investors (FIIs) worry that “higher-for-longer” oil prices would be a major drag on India Inc.’s earnings projections by hitting their margins and will also diminish households’ spending power.

Investors shift focus to the Fed policy

On Wednesday, the major trigger for global markets will be the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT, in which the central bank is expected to leave interest rates unchanged in the range of 3.50%-3.75%.

The Fed is expected to warn of upside inflation and downside economic risks amid escalated energy prices. This will be the last Fed policy meeting by Jerome Powell as Chairman. Investors will pay close attention to Fed Chair Powell’s speech to get fresh cues on the US interest rate outlook.

Technical Analysis: USD/INR approaches all-time high above 95.00

USD/INR trades higher at around 94.75 in the opening session on Wednesday. The pair holds a bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at roughly 93.66, keeping the recent advance supported.

The Relative Strength Index (RSI) around 63 suggests firm but not yet overbought upside momentum, reinforcing the constructive tone while leaving room for additional gains.

On the downside, immediate support is seen at the 20-day EMA near 93.66. As long as USD/INR defends this moving average, dips are likely to attract buying interest, and the broader uptrend is expected to stay intact. Looking up, the spot is expected to revisit the all-time high slightly above 95.00.

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Aussie Holds Firm on Hot CPI Print

The Australian dollar edged down to below $0.72, but stayed near four-year highs as a sharp rise in inflation kept expectations of a rate hike next week. Headline inflation jumped to 4.6% annually in March, slightly below forecasts of 4.7%, but stayed above the Reserve Bank’s 2–3% target and marked the highest since monthly CPI data began in 2025.

The annual trimmed-mean measure held at 3.3%, in line with expectations as higher fuel costs stemming from Middle East supply disruptions added to already elevated price pressures. In the absence of a major upside inflation surprise, the Aussie attracted some sellers amid cautious risk sentiment due to persistent geopolitical uncertainties. Still, markets priced in increased odds of a 25 bp rate hike next week. In the US and other G-7 economies, policymakers are likely to hold rates steady this week while monitoring the risk of rising energy costs fueling inflation, as the Strait of Hormuz remained effectively closed amid US-Iran tensions.