• NZD/USD drifted lower on Tuesday as the U.S. dollar recovered modestly as markets assessed rising geopolitical and trade risks, particularly the expansion of U.S. sanctions against Iran.
•U.S. Treasury Secretary Scott Bessent unveiled expanded sanctions against Iran on Monday, warning countries and companies to cut business ties with Tehran or risk losing access to the U.S. dollar-based financial system.
• The latest U.S. sanctions are adding another layer of uncertainty to global markets. Washington has expanded measures targeting Iran and warned countries and companies that continue doing business with Tehran that they could face restrictions on access to the U.S. financial system.
• The next major catalyst is Wednesday’s U.S. July PCE inflation report. The Reuters consensus cited in the setup looks for the headline PCE price index to rise 0.1% month-on-month and 3.6% year-on-year..
• Markets will then turn to Fed Chair Kevin Warsh’s Jackson Hole speech on Friday. Investors will scrutinize his comments for clues about the Fed's approach to inflation, interest rates and the outlook for monetary policy.
• Immediate resistance is located at 0.5990(23.6%fib), any close above will push the pair towards 0.6024 (Higher BB).
• Support is seen at 0.5894 (38.2%fib) and break below could take the pair towards 0.5806(50%fib).
Recommendation: Good to buy around 0.5950 with stop loss of 0.5880 and target price of 0.6050
