NZD/USD weakens to near 0.5850 as markets brace for Fed rate decision

The NZD/USD pair attracts some sellers to around 0.5865 during the early European session on Wednesday. Traders prefer to wait on the sidelines ahead of the US Federal Reserve (Fed) interest rate decision later on Wednesday, with no change in rate expected. Jerome Powell’s press conference will be closely watched. 

The US central bank is widely expected to maintain interest rates at 3.50%–3.75% at its April policy meeting later on Wednesday. This would mark the third consecutive hold. This policy meeting is likely Chair Jerome Powell's final session before a Fed Chair transition to nominee Kevin Warsh.

Powell’s press conference after the rate decision might offer some hints about how the Fed may react to the risks ahead. If the US central bank maintains a hawkish tone regarding persistent inflation, this could provide some support to the Greenback and act as a headwind for the pair in the near term.

US President Donald Trump said Iran asked the US to lift a naval blockade of the Strait of Hormuz while the two sides negotiate an end to the two-month war. Mediators in Pakistan expect Iran to submit a revised proposal to end the war in the next few days, CNN reported on Tuesday, citing sources close to the mediation process. Any signs of a possible peace deal or easing tensions between the US and Iran could improve risk sentiment. This, in turn, might help limit the Kiwi’s losses.