• NZD/USD attracts fresh sellers as geopolitical risks help demand for the safe-haven USD.
• Reviving inflation fears bolster hawkish Fed bets and lend additional support to the buck.
• The downside seems limited as traders opt to wait for the RBNZ decision on Wednesday.

The NZD/USD pair comes under renewed selling pressure on Tuesday and slide back below mid-0.5800s during the first half of the European session. The intraday decline is sponsored by a modest US Dollar (USD) strength, albeit the downside seems limited ahead of the Reserve Bank of New Zealand's (RBNZ) rate decision on Wednesday.

The RBNZ is widely expected to leave the Official Cash Rate (OCR) unchanged at 2.25% for a third straight meeting. Traders, however, are pricing in a 25-basis-point (bps) rate hike at the July 8 meeting, and a total of 125 bps of tightening over the next twelve months. Meanwhile, the focus will be on the accompanying policy statement and the post-meeting press conference, where comments by RBNZ Governor Anna Breman will drive the New Zealand Dollar (NZD) and provide a fresh impetus to the NZD/USD pair.

Heading into the key central bank event, mixed signals over a potential US-Iran peace deal help the safe-haven USD to attract some buyers following the overnight fall to over a one-week low and undermine the risk-sensitive Kiwi. According to media reports, US forces conducted self-defense strikes in southern Iran on Monday, targeting missile launch sites and Iranian boats attempting to emplace mines. This, along with disagreements over Iran's nuclear program and the Strait of Hormuz, keeps a lid on the optimism.

Meanwhile, the US-Iran standoff triggers a modest recovery in Crude Oil prices, reviving inflation fears and bolstering expectations for a more hawkish US Federal Reserve (Fed). This further supports the Greenback and exerts downward pressure on the NZD/USD pair. Traders now look forward to the release of the Conference Board's US Consumer Confidence Index for short-term opportunities, though the focus will be on the Prelim US GDP and the US Personal Consumption Expenditures (PCE) Price Index on Thursday.