NZD/USD fell to two-week lows near 0.5840 and dipped below 0.5850. It is set for a weekly drop of more than 2% amid risk-off trading, a US–Iran stalemate, and Brent crude near $110.00.
The US Dollar rose as US Treasury yields climbed and markets priced in more Federal Reserve rate rises after US inflation data earlier in the week. Comments from US President Donald Trump that China agreed to buy Oil from the US added to higher crude prices, which weighed on the Kiwi because New Zealand is a net Oil importer.
New Zealand’s Business NZ PMI eased to 50.5 in April from 52.8 in March, a seven-month low. This data did not lift the New Zealand Dollar.
NZD/USD has dropped about 2% over the last four days and remains in a bearish trend. On the 4-hour chart, the RSI is in oversold territory and the MACD histogram is negative.
Support is seen near 0.5815, with another level at 0.5795 from 13 April. Any rebound may face resistance above 0.5920, then around 0.5970 and just above 0.5990.
Looking back at the analysis from 2025, we can see how risk-off sentiment and a strong dollar pushed NZD/USD below 0.5850. Today, the situation is quite different, with the pair trading much more firmly around 0.6150. The fundamental drivers we saw last year have almost completely reversed.
A major factor then was Brent crude hitting nearly $110, which hurt the Kiwi as a net oil importer. We are now seeing Brent stabilize around $85 a barrel due to increased global production, easing that specific pressure on the New Zealand dollar. This shift has provided a significant tailwind for the currency that was absent in 2025.
Last year, the market was driven by expectations of Federal Reserve rate hikes, but now the Fed has paused with its key rate at 4.5%. In contrast, with New Zealand’s latest quarterly inflation figures still hot at 4.2%, the RBNZ is signaling a ‘higher for longer’ stance on its 5.0% cash rate. This growing interest rate differential in favor of the Kiwi is a key reason for its current strength.
We should also note that the weak New Zealand manufacturing PMI of 50.5 seen in April 2025 has improved significantly. The latest figures from Business NZ show a much healthier expansion at 53.2, suggesting the domestic economy has better footing. This resilience contrasts sharply with the slowdown we were concerned about last year.
Given this new environment, we believe holding short positions or buying NZD/USD puts is no longer the correct strategy. Traders should consider positioning for further Kiwi strength by purchasing call options with strike prices around 0.6250. Bull call spreads could also be used to cheapen the trade and define risk for a move towards the 0.6300 level in the coming weeks.
Implied volatility has been trending lower, recently hitting 12-month lows near 8.5%, making option premiums relatively inexpensive at the moment. This presents a good opportunity to establish long positions with defined risk. We must remember that while the technicals were oversold then, the fundamental picture now supports a potential breakout to the upside.
