NZD/USD eased in the US session, moving back towards 0.5880 as the US Dollar weakened despite ongoing geopolitical risks. The Dollar had earlier been supported by safe-haven demand linked to tensions around the Strait of Hormuz, but later lost traction as US yields fell and sentiment improved.
Market focus also turned to US monetary policy after President Donald Trump repeated his preference for lower interest rates. He said he would be “disappointed” if Kevin Warsh did not cut rates “right away” if confirmed as the next Federal Reserve Chair.
Warsh said most presidents tend to prefer lower rates and stated that Federal Reserve independence rests with the institution. He said tariff-related inflation risks have eased somewhat, and argued that a smaller balance sheet could support lower rates, improved inflation, and stronger economic growth.
He also criticised forward guidance and called for changes to policy tools, communication methods, and the inflation framework. He added that current data used to assess inflation is “quite imperfect”.
On the four-hour chart, NZD/USD trades at 0.5888, below the 20-period SMA at 0.5891 and above the 100-period SMA at 0.5813, with RSI near 50. Resistance levels are 0.5891, 0.5904, 0.5907, and 0.5965, while support sits at 0.5887, 0.5874, and 0.5813.
We remember looking back to 2025 when there was significant political pressure on the Federal Reserve to cut interest rates. At that time, NZD/USD was struggling below 0.5900, caught between geopolitical risk and a US dollar that was beginning to soften. This period of uncertainty set the stage for the policy divergence we are now seeing.
Those discussions from last year about changing the Fed’s communication style have since become reality under the new leadership. With less forward guidance, Fed meeting outcomes are now more uncertain, causing spikes in short-term volatility around announcement dates. This has fundamentally changed how we must hedge and position for event risk.
As of today, April 22, 2026, the NZD/USD is trading near 0.6150, reflecting the rate cuts the Fed delivered through late 2025 and early 2026. However, with the most recent US CPI data showing inflation stubbornly holding at 3.1%, the market is now pricing in a pause from the Fed. This puts a temporary floor under the US dollar.
Given this dynamic, we see value in selling options to collect premium, as the pair may enter a period of consolidation. The one-month implied volatility for NZD/USD options is currently at 9.8%, which is a reasonable level to be selling. A short strangle, with strikes at 0.6000 and 0.6300, appears attractive for the coming weeks.
This strategy benefits from time decay and the view that the pair will trade within this range as the market awaits fresh inflation data. The main risk to this position would be an unexpectedly weak US jobs report or a surprisingly hawkish statement from the Reserve Bank of New Zealand. The support level we watched back in 2025 near 0.5900 now seems a distant memory but serves as a reminder of how quickly sentiment can shift.
