NZD/USD rose 0.2% to about 0.5835 in European trading on Thursday. The move followed confirmation from the US and Iran that they will send teams to Pakistan for initial talks on a 10-point peace proposal.
The White House said President Donald Trump will send a team led by Vice President JD Vance to Pakistan on Saturday. Iran’s ambassador Reza Amiri Moghadam also said a team would travel at night for the first round of talks.
Geopolitical Developments And Market Reaction
Moghadam said the US breached parts of the 10-point plan, and referred to Israel attacking Iran-backed Houthis in Lebanon. Market conditions stayed mildly risk-averse, with S&P 500 futures down 0.4% in European trade and the US Dollar Index near 99.00.
In technical terms, NZD/USD held above the 20-day EMA at 0.5796, keeping a mild upward bias. The 14-day RSI moved back into the 40.00–60.00 range, while support is seen at 0.5796 and then 0.5753, with resistance near 0.5900.
The Reserve Bank of New Zealand targets inflation between 1% and 3%, with a 2% mid-point. China’s role as New Zealand’s biggest trading partner and dairy export prices can also affect NZD movements.
Given the de-escalation between the US and Iran, we are seeing a classic risk-on move favoring the New Zealand dollar. With the NZD/USD pair pushing above its 20-day moving average to 0.5835, there is a clear short-term bullish signal. This presents an opportunity for traders to position for further upside in the coming weeks.
A straightforward approach would be to buy NZD/USD call options with an expiration in late April or early May. This allows us to capitalize on a potential rally toward the March high of 0.5900, while limiting our downside risk to the premium paid. The current shift in the Relative Strength Index further supports this view of a bullish reversal gaining momentum.
Options Strategy And Supporting Fundamentals
This bullish sentiment is not just based on geopolitics; it is backed by fundamental data supporting the Kiwi. China’s latest Caixin Manufacturing PMI, released last week, came in at 51.4, marking the sixth consecutive month of expansion and signaling strong demand for New Zealand’s exports. We’ve also seen consistent strength in the Global Dairy Trade index, which posted a 2.8% gain in its most recent auction, directly boosting New Zealand’s terms of trade.
Furthermore, the interest rate differential between the two countries remains a powerful driver for the pair. The Reserve Bank of New Zealand is expected to hold its Official Cash Rate at 5.5% while the US Federal Reserve has signaled it is closer to an easing cycle. We saw how this dynamic created sustained upward pressure on the pair during a similar period in the summer of 2025.
However, we must remain cautious as the situation is fragile and market sentiment could turn quickly if the talks falter. S&P 500 futures are already slightly down, indicating that not all market participants are convinced. We only have to look back to the initial Red Sea disruptions in late 2024 to remember how quickly implied volatility can spike, causing a flight to the safety of the US dollar.
For those wary of taking a purely directional bet, purchasing a straddle by buying both a call and a put option could be a prudent strategy. This position would profit from a significant price move in either direction, whether the talks lead to a sustained peace-driven rally or collapse into a risk-off panic. This approach effectively allows us to trade the uncertainty of the event itself.
