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NZD/USD Rebounds on Risk-On Mood, Even as Israel Targets Iran
Economic
Summary:
The New Zealand Dollar rises sharply against the US Dollar to trade near 0.6040, gaining on a rebound in global risk sentiment despite heightened tensions between Israel and Iran.
Buy
TradingNZDUSD
EXP
0.60499
Entry Price
0.61600
TP
0.60000
SL
0.60685 +0.00083 +0.14%
0
Point
Flat
0.60000
SL
CLOSING
0.60499
Entry Price
0.61600
TP
The New Zealand Dollar (NZD) surged on Monday, marking a significant intraday gain of 0.5% to hover near the 0.6040 mark against the US Dollar (USD), as traders warmed up to riskier assets even in the face of escalating geopolitical tensions in the Middle East. This renewed appetite for risk came despite Israel’s intensification of military operations targeting Iranian nuclear and defense infrastructure.
The uptick in the NZD/USD pair highlights the currency market’s complex dynamics, where traditional risk-off triggers such as armed conflict are being momentarily outweighed by broader macroeconomic expectations — notably the Federal Reserve’s upcoming monetary policy decision.
In a move that would typically send shockwaves across global financial markets, Israel launched a strategic offensive on Iranian military and nuclear sites late last week. The operation was reportedly aimed at curbing Iran’s nuclear ambitions, stoking fears of a broader regional conflict. However, despite the severity of the situation, investor sentiment appeared more resilient than expected, with equities inching higher and commodity-linked currencies like the Kiwi posting gains.
The resilience in risky assets suggests that investors are positioning themselves ahead of key macroeconomic events rather than solely reacting to geopolitical developments. The US Dollar Index (DXY) slipped toward the 98.00 level after early session strength, reflecting a rotation out of the safe-haven Greenback and into higher-yielding currencies.
Looking ahead, attention turns sharply to the US Federal Reserve’s rate decision this Wednesday. While the central bank is widely expected to hold rates steady in the 4.25%–4.50% range, the focus will be on Fed Chair Jerome Powell’s tone during the post-decision press conference and the updated "dot plot" projection.
According to the CME FedWatch Tool, markets are currently pricing in a high probability of a pause in the Fed’s tightening campaign. However, Powell’s guidance and the dot plot will likely offer vital clues on whether rate cuts are still on the table later this year, or if the Fed will stay the course amid sticky inflation.
Another potential market mover arrives just a day prior, with the release of US retail sales data for May. Consensus expectations suggest a 0.7% decline in consumer spending, a critical metric for gauging the resilience of the US economy. Any material deviation from expectations could further shift sentiment and reshape positioning in FX markets, especially for pairs like NZD/USD.
Technical Analysis
From a technical standpoint, the NZD/USD pair has successfully bounced off a short-term bullish trendline, showing strong intraday momentum. After a period of bearish consolidation, signs of recovery emerged as the Relative Strength Index (RSI) rebounded from oversold territory, suggesting that the downside correction may be losing steam.
The 50-day Exponential Moving Average (EMA50), which had acted as dynamic resistance in recent weeks, is being tested once again. A decisive break above this level could pave the way for further gains toward the next key resistance zone near 0.6160 — a level that aligns with previous price action congestion and psychological resistance.
If momentum continues and broader market sentiment remains constructive, bulls may aim for this upside target in the short term. However, any dovish surprise from the Fed or an unexpected intensification in geopolitical risk could quickly shift the tide.
TRADE RECOMMENDATION
BUY NZDUSD
ENTRY PRICE: 0.6050
STOP LOSS: 0.6000
TAKE PROFIT: 0.6160
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