On Easter Monday, the US Dollar (USD) experienced broad-based weakness against major currencies, with the New Zealand Dollar (NZD) and Pound Sterling (GBP) both posting notable gains as market sentiment shifted in favor of riskier assets [1][2]. The NZD/USD pair rebounded from four-month lows near 0.5680 to reach 0.5720, capitalizing on moderate USD weakness and easing bearish pressure, although the broader downtrend remains intact [1]. Similarly, GBP/USD rose by 0.45% to approximately 1.3255 during the European session, reflecting significant bids for the Pound as risk-on sentiment strengthened [2].
The improvement in market sentiment was attributed to ongoing negotiations between Iran and the US regarding a potential ceasefire. According to a Reuters report cited in both articles, Iran and the US have received a framework for a plan to end hostilities, which could lead to the reopening of the Strait of Hormuz [1][2]. However, while [1] notes the possibility of reopening the Strait, [2] clarifies that Iran dismissed the reopening in return for a 'temporary ceasefire' and stated it would not accept any deal under deadlines or pressure. Additionally, [2] reports that both nations are discussing a two-tier deal to end hostilities by Monday, highlighting some discrepancies in the details provided by the sources.
Currency heat maps from both articles show the USD was weakest against the NZD, with the USD down 0.54% to 0.55% against the NZD and 0.39% to 0.40% against the GBP [1][2]. The US Dollar Index (DXY) was reported down 0.35% to near 99.85 during the European session [2]. Technical analysis for NZD/USD indicates initial signs of recovery, with bullish divergence in the 4-hour RSI and the MACD line attempting to cross above the Signal line. However, confirmation of a corrective reaction would require the pair to break above resistance levels at 0.5740, 0.5753, and preferably 0.5780 [1].
On the UK front, investors are awaiting further signals regarding potential Bank of England (BoE) interest rate hikes amid ongoing Middle East tensions. BoE Governor Andrew Bailey stated that monetary policy action would be considered if an oil price shock becomes pivotal, emphasizing the importance of addressing the source of energy price shocks [2].
CONCLUSION
The US Dollar weakened notably against both the New Zealand Dollar and Pound Sterling as risk sentiment improved on news of Iran-US ceasefire negotiations. While technical indicators suggest a potential recovery for NZD/USD, broader trends remain negative. Market participants are closely monitoring geopolitical developments and central bank policy cues for further direction.