NZD/USD extends its decline on Thursday, trading near 0.5770 and marking its third consecutive daily loss after failing to hold gains near the 0.5900 level reached last week. The downward move is mainly driven by worsening global risk sentiment as escalating tensions in the Middle East reduce demand for risk-sensitive currencies like the New Zealand Dollar.

Geopolitical uncertainty intensified after Iran rejected a proposal from the United States aimed at ending the conflict and denied that any negotiations were taking place while military operations continued. US President Donald Trump called for more serious negotiations while warning that stronger military action could be taken if talks failed. This uncertain environment is supporting demand for the US Dollar, which is often viewed as a safe-haven currency during periods of global instability.

Recent military developments, including Israeli strikes and renewed missile and drone attacks, have increased fears that the conflict could last longer than expected. Iran’s demands — including security guarantees, financial compensation, and greater control over the Strait of Hormuz — have made negotiations more complicated and reduced the likelihood of a quick resolution. As a result, global markets remain cautious, which continues to pressure the NZD.

On the monetary policy side, analysts at HSBC believe the New Zealand Dollar may remain under pressure in the near term, even though markets still expect further tightening from the Reserve Bank of New Zealand. HSBC expects the central bank to keep interest rates unchanged at the upcoming April 8 meeting. While higher energy prices are supporting local bond yields, only a clearly hawkish surprise from the central bank is likely to reverse the NZD’s current downtrend.

Looking ahead, New Zealand’s economic calendar remains relatively quiet, with attention on the Roy Morgan Consumer Confidence survey. In the US, speeches from several Federal Reserve officials later this week could create short-term volatility, although geopolitical developments are likely to remain the primary driver of NZD/USD in the near term.

Trade Idea:
Sell NZD/USD below 0.5790 targeting 0.5700. Risk-off sentiment and strong USD demand may continue to pressure the pair unless RBNZ delivers a hawkish surprise.