NZD/USD Drops Below 0.5900 Amid Iran Tension, USD Gains
NZD/USD remains under pressure below 0.5900 and monthly lows as markets await Iran’s response to U.S. airstrikes.
FUNDAMENTAL OVERVIEW:
The NZD/USD pair opens the week with a modest bearish gap, extending its decline from last Monday’s year-to-date high near the 0.6100 level. During the Asian session, the pair drops to a fresh monthly low around the 0.5930 region, appearing increasingly vulnerable amid prevailing risk-off sentiment.
Investor caution deepens following U.S. airstrikes on three Iranian nuclear facilities, carried out in coordination with Israel. With markets on edge awaiting Iran’s response, escalating Middle East tensions continue to dampen global risk appetite, prompting safe-haven flows into the U.S. Dollar and weighing on the risk-sensitive Kiwi.
Additionally, the USD finds further support from the Federal Reserve’s hawkish tone last week. While the Fed maintained projections for two rate cuts in 2025, it reduced the outlook for cuts in 2026 and 2027. In contrast, the Reserve Bank of New Zealand (RBNZ) is expected to ease policy further amid subdued inflation and mounting economic pressure from U.S. tariffs.
New Zealand’s GDP growth in the first quarter exceeded expectations last week, marking a second straight quarter of expansion following two consecutive contractions. This strengthens market sentiment that only one additional rate cut is likely in the current easing cycle, potentially fully priced in by November. Attention now turns to upcoming domestic data—such as trade balance and consumer confidence figures—for deeper insight into New Zealand’s economic trajectory.
NZD/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
NZD/USD is trading within a down channel.
NZD/USD is moving below all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in the Selling Zone, while the Stochastic oscillator suggests a Negative trend.
Immediate Resistance level: 0.5923
Immediate support level: 0.5865
HOW TO TRADE NZD/USD
The NZD/USD has experienced a sharp reversal after an extended bullish run, decisively breaking its upward trendline and briefly dipping below key support. The current price action is marked by the formation of a three black soldiers’ pattern, indicating strong bearish momentum with large downward-trending candles. We expect the pair to retest its former support level (now resistance) before potentially falling further.
