Ella 
In early European trading on Tuesday, the NZD/USD pair fell to around 0.6160. NZD/USD’s decline was driven by a strengthening US dollar (USD) amid a risk-off environment and rising tensions in the Middle East. Meanwhile, the U.S. dollar index rose to a multi-week high near 102.90.
Rising geopolitical tensions in the Middle East dominated market sentiment on Tuesday. Iran’s Islamic Revolutionary Guard Corps (IRGC) fired missiles at targets in northern Iraq, according to a statement published by Iranian state media. According to reports, the ballistic missile target was near the U.S. Consulate in Erbil, Iraq. That said, concerns about uncertainty and geopolitical tensions could boost safe-haven assets like the U.S. dollar and weigh on riskier assets like NZD/USD.
Data released by the New Zealand Institute of Economic Research (NZIER) on Tuesday showed that New Zealand’s business confidence index in the fourth quarter was -2.0%, a significant improvement from -52% in the previous quarter. However, the indicator failed to boost the New Zealand dollar as traders turned cautious.
The U.S. New York Empire State Manufacturing Index for January will be released later on Tuesday. China’s fourth-quarter gross domestic product (GDP), industrial production and China’s total retail sales of consumer goods will be closely watched events on Wednesday. Additionally, U.S. retail sales data will be released on Wednesday. On Friday, New Zealand will publish its business Purchasing Managers Index (PMI) report. These numbers may point the way for the NZD/USD currency pair.
