Insights 
VT 
NZD/USD opens the week with a slight bearish tone, moving away from last week’s peak of approximately 0.6100. The pair reaches a new monthly low around 0.5930 during the Asian session, reflecting potential downward pressure amid a risk-averse environment.
The backdrop for this movement includes the US’s military action alongside Israel against Iran, targeting nuclear facilities. This escalation in Middle Eastern geopolitical risks increases the demand for safe-haven assets, benefiting the US Dollar (USD) and pressuring the New Zealand Dollar, known as the Kiwi.
Us Fed Influence
The USD is further buoyed by the Federal Reserve’s hawkish signals, indicating fewer rate cuts in 2026 and 2027 while maintaining expectations for two cuts in 2025. In contrast, the Reserve Bank of New Zealand is anticipated to lower interest rates due to lower inflation and economic challenges stemming from US tariffs.
Technically, a break below the short-term trading range and the 0.6000 psychological level points to a downward trend for NZD/USD. This outlook is reinforced as the market looks ahead to the release of forthcoming US PMIs for new directional cues.
The recent pressure on NZD/USD reflects not only a shift in broader sentiment but a more pronounced recalibration of risk in light of the latest geopolitical developments. With tensions in the Middle East escalating after US-led involvement targeting Iranian nuclear sites, market participants have naturally funnelled capital into traditionally safer assets. The US Dollar, often a first port of call in jittery times, has gained from this reaction. As risk appetite wanes, currencies more closely tied to commodities or global growth expectations, such as the New Zealand Dollar, tend to move in the opposite direction.
In parallel, US monetary policy expectations continue to support the Dollar, with persistent strength driven by the Federal Reserve’s forward guidance. Powell and his colleagues have dialled back expectations for prolonged easing. Even as the near-term outlook still points to a couple of rate reductions by next year, the longer horizon suggests more restraint, showing they’re not in a hurry to shift from a tightening bias. This stance, dovish only when compared to last year, keeps rates relatively elevated and supports the Dollar over time.
Rbnz Perspective
Orr’s central bank, however, is facing a different trajectory. With inflation metrics now pointing lower, and fresh headwinds arising from US trade measures, New Zealand’s path forward doesn’t leave much room to maintain high borrowing costs for long. The softer inflation profile may persuade policymakers to begin loosening conditions—although likely not immediately, the direction of travel is hard to deny. This divergence doesn’t favour the Kiwi.
Closer to the charts, the psychological importance of the 0.6000 mark should not be understated. That threshold has now been breached convincingly enough to suggest more than a temporary move. The slide to fresh monthly lows highlights how one-sided sentiment has become. Below that level, support doesn’t properly emerge until closer to the 0.5900 area, where historical demand has stepped in before.
Looking into economic releases ahead, Wednesday’s US PMI figures may stir volatility and bring corrective flows if expectations fall short. However, should incoming data remain constructive and reaffirm a resilient US economy, market pricing could edge toward an even firmer Dollar. Traders should already be mindful of how supply chains and business orders are tracking – both hint at inflationary stickiness that the Fed won’t be keen to ignore.
From our standpoint, volatility seems likely to remain elevated. Tactical engagement rather than conviction-driven positioning may be the more effective approach in the near term, especially with the prevailing data-driven tone of US monetary policy. Stops should be considered tighter, particularly below recent support zones, while short-term resistance might be eyed near 0.5980 on any corrective rally.
In short, unless there is a sudden softening in geopolitical risk or a marked breakdown in upcoming US macro data, any rebound in this pair may stay capped. The preference in positioning leans toward favouring Dollar strength over Kiwi resilience in the immediate sessions ahead.
