NZD/USD traded higher on Monday, hovering near 0.5840 and posting modest daily gains as the US Dollar weakened across the board. The New Zealand Dollar found support from improved global risk sentiment after reports emerged of progress toward a peace agreement between the United States and Iran.
Investor confidence improved following comments from US President Donald Trump, who stated that the Strait of Hormuz would be reopened under the proposed agreement. Iranian officials also confirmed the development, while representatives from both nations indicated that a memorandum of understanding is expected to be signed in Switzerland later this week. Reports further suggest that the ceasefire currently in place will be extended, allowing additional time for negotiations and reducing concerns about renewed conflict.
The easing of geopolitical tensions has reduced demand for safe-haven assets, putting pressure on the US Dollar. As a result, the US Dollar Index (DXY) moved lower toward the 99.50 region at the beginning of the week. Commodity markets also reacted strongly, with crude oil prices falling sharply. West Texas Intermediate (WTI) dropped nearly 5% as traders anticipated a normalization of global energy supply routes following the planned reopening of the Strait of Hormuz.
Despite weaker domestic economic indicators, the New Zealand Dollar has remained relatively resilient. Recent data showed that New Zealand’s services sector continued to struggle, with the BusinessNZ Performance of Services Index declining to 47.5 in May from a revised 48.7 in the previous month. This marked the fourth consecutive month of contraction. In addition, the Composite Index fell to 48.4, its weakest reading since June 2025, highlighting broader signs of slowing economic activity.
Nevertheless, ongoing weakness in the Greenback has offset concerns surrounding New Zealand’s economic outlook. Market participants believe that lower energy prices could help ease inflationary pressures globally, reducing the urgency for tighter monetary policy. Attention is now shifting toward the Federal Reserve’s policy announcement on Wednesday, where investors will closely examine updated economic forecasts and guidance on the future direction of US interest rates.
Trade Idea: Buy NZD/USD above 0.5820, targeting 0.5900–0.5930, with a stop-loss below 0.5780. Continued US Dollar weakness and stronger risk appetite may support further gains.