Both the Australian Dollar (AUD) and New Zealand Dollar (NZD) extended losses against the US Dollar (USD) for a fourth consecutive day on Friday, driven by heightened geopolitical tensions in the Middle East and broad-based USD strength. The AUD/USD pair traded around 0.6866, marking fresh two-month lows and heading for a weekly decline of over 2%, its steepest drop since October 2025 [1]. Meanwhile, NZD/USD traded near 0.5750, down 0.17% on the day, as risk aversion and weak domestic confidence weighed on the Kiwi [2].
The US Dollar Index (DXY) was quoted at 100.19, poised to finish the week higher by over 0.50% [1]. The USD's safe-haven appeal was reinforced by rising oil prices, which are indirectly boosting demand for the currency, and by higher US Treasury yields, with the 10-year yield hovering near 4.45% [1][2]. The shutdown of the Strait of Hormuz by Iran and US President Donald Trump's temporary pause on planned strikes against Iranian energy infrastructure for ten days contributed to market uncertainty and elevated energy prices, fueling inflation fears [2].
US economic data showed mixed signals: the University of Michigan Consumer Sentiment Index declined to 53.3 in March from 55.5 previously, indicating growing pessimism among households, while one-year inflation expectations rose to 3.8% [2]. Federal Reserve officials maintained a cautious tone, with Vice Chair Philip Jefferson stating that higher energy prices should have only a modest impact on inflation unless the shock is prolonged, and Governor Michael Barr warning that another price shock could lift inflation expectations [2].
In New Zealand, household confidence deteriorated sharply, with the ANZ-Roy Morgan Consumer Confidence Index dropping to 91.3 in March from 100.1 in February [2]. RBNZ Governor Anna Breman indicated the central bank may look through temporary energy-driven inflation but is prepared to raise interest rates if persistent pressures threaten to unanchor inflation expectations [2]. Technical analysis for AUD/USD shows a bearish outlook after breaking below the 0.7000 psychological level and the 50-day SMA at 0.7015, with immediate support at the 100-day SMA around 0.6815 and resistance at 0.6900 [1]. The RSI retreats toward 37, and the MACD remains negative, suggesting further downside risk [1].
Overall, the combination of a strong US Dollar, rising Treasury yields, and deteriorating global sentiment continues to pressure risk-sensitive currencies like the AUD and NZD, with both pairs trading at multi-month lows [1][2].
CONCLUSION
The US Dollar's safe-haven status and rising yields, combined with escalating geopolitical risks and weak consumer confidence in Australia and New Zealand, have driven AUD/USD and NZD/USD to multi-month lows. Technical and fundamental signals point to continued downside risk for both currencies. Market participants remain cautious, with central banks signaling readiness to respond if inflation expectations become unanchored.