The NZD/USD currency pair extended its decline for the third straight day on Thursday, trading around 0.5770 and down 0.65% on the day, after failing to sustain levels near 0.5900 reached last week [1]. The primary driver behind this bearish move is a deterioration in market sentiment, as heightened tensions between Iran and the United States have lifted demand for the safe-haven US Dollar and pressured risk-sensitive currencies like the New Zealand Dollar [1]. Iran has rejected a 15-point US proposal to end the conflict and denied ongoing negotiations while military operations continue. Meanwhile, US President Donald Trump has called for more serious talks and warned of stronger military action, further increasing uncertainty in the region [1].
Recent military developments, including Israeli strikes in Iran and renewed missile and drone attacks, have fueled concerns about a prolonged conflict. Tehran’s demands for security guarantees, financial compensation, and control over the Strait of Hormuz complicate prospects for a near-term resolution [1]. This geopolitical backdrop has overshadowed other market drivers, with the US Dollar strengthening against most major currencies and the New Zealand Dollar showing particular weakness, except against the Australian Dollar [1].
On the monetary policy front, HSBC expects the New Zealand Dollar to remain under pressure in the coming weeks, despite expectations of further tightening by the Reserve Bank of New Zealand (RBNZ). The bank anticipates the April 8 meeting will result in a hold at 2.25%. While higher energy prices are supporting local yields, only a clearly hawkish surprise from the central bank could sustainably reverse the NZD’s downward trend [1].
From a macroeconomic perspective, New Zealand’s calendar remains light, with attention on the Roy Morgan Consumer Confidence survey due later in the day. In the US, speeches from several Federal Reserve officials expected on Thursday and Friday may add some volatility, but markets remain primarily driven by geopolitical developments [1].
CONCLUSION
Escalating Iran-US tensions have triggered a risk-off move, strengthening the US Dollar and pressuring the NZD/USD pair for a third consecutive day. Despite upcoming central bank meetings and local data releases, geopolitical uncertainty remains the dominant market driver. Unless the RBNZ delivers a hawkish surprise, the New Zealand Dollar is likely to stay under pressure.