NZD/USD weakens below 0.5850 as US-Iran talks remain uncertain

The NZD/USD pair loses ground to around 0.5830 during the Asian trading hours on Wednesday. The pair edges lower as traders seek safety in the US Dollar (USD) amid the ongoing conflict in the Middle East.  

US President Donald Trump appears to be determined to reach a deal with Iran aimed at ending hostilities ‌in the Middle East. Iran indicated that it prefers to engage with US Vice President JD Vance in any renewed diplomatic talks, rather than special envoy Steve Witkoff or Jared Kushner, highlighting trust issues amid already fragile ceasefire talks.

An Israeli official stated that they viewed it as unlikely that Iran would agree to US demands in any new round of negotiations, which broke down on February 28 with the launch of the US-Israeli war on Iran. Signs of a prolonged conflict in the Middle East could boost the Greenback against the New Zealand Dollar (NZD), while hopes for a US-Iran ceasefire could undermine the USD. 

Reserve Bank of New Zealand (RBNZ) Chief Economist Paul Conway said that the central bank sees lingering slack in the economy that will shape how aggressively it responds to the inflationary aftershocks of higher oil prices. 

Fitch Ratings on Friday cut the outlook on New Zealand's (NZ) Long-Term Foreign-Currency Issuer Default Rating (IDR) to negative from stable and affirmed the IDR at ‘AA+'. The statements said the Iran war poses risks to the country's economy, given its dependence on energy imports.