NZ Dollar Falls Amid Rising U.S.- Iran Tensions

(RTTNews) - The New Zealand dollar weakened against other major currencies in the European session on Wednesday, due to rising risk aversion associated with the developing geopolitical tensions between the US and Iran.

Iranian media reported explosions in Bushehr, home to the Iranian nuclear power plant.

In addition to following geopolitical news and tracking earnings updates, investors awaited the European Central Bank's monetary policy announcement on Thursday.

U.S. military carried out its 11th consecutive night of strikes against Iran and President Trump vowed to bomb Pickaxe Mountain.

Iranian media reported explosions in Bushehr, home to the Iranian nuclear power plant. Meanwhile, the New Zealand's hot inflation confirmed RBNZ's concerns and raised expectations for additional policy tightening, following the first-rate increase in three years in July.

Market expectations that the Reserve Bank of New Zealand (RBNZ) will raise interest rates once again in September have been strengthened by extreme inflation data.

The annual inflation rate in New Zealand increased from 3.1% in Q1 to 4.1% in Q2, exceeding both the central bank's prediction of 3.9% and market forecasts of 4.0%. Inflation is still considerably above the RBNZ's target range of 1-3%, having reached its highest level since Q4 2023.

In the European trading today, the NZ dollar fell to a 1-week low of 0.5813 against the U.S. dollar and a 2-day low of 1.9622 against the euro, from early highs of 0.5834 and 1.9551, respectively. If the kiwi extends its downtrend, it is likely to find support around 0.57 against the greenback and 1.99 against the euro.

Against the yen and the Australian dollar, the kiwi edged down to 94.76 and 1.2030 from early highs of 95.17 and 1.2010, respectively. The kiwi is likely to find support around 93.00 against the yen and 1.21 against the aussie.

Looking ahead, U.S. MBA mortgage approvals data and U.S. EIA crude oil data are slated for release in the New York session.