AUD/USD, NZD/USD may extend gains unless headline hockey turns ugly

• Iran deal hopes spark fresh risk-on move despite Tehran's pushback
• AUD/USD and NZD/USD flash bullish reversal signals
• Key upside and downside levels mapped as headline hockey rolls on

Risk wants to rip

The Aussie and Kiwi may extend their overnight gains into Asia, and it's not hard to see why. Despite being told so many times before that an imminent deal between the United States and Iran was just around the corner, markets have again latched onto the prospect that peace may finally be at hand.

President Donald Trump said the United States and Iran could sign a deal as soon as this weekend that would reopen the Strait of Hormuz to shipping, describing it as a "great settlement of the war". Iran has already pushed back on those claims, saying no final decision has been made and that it would not compromise on its red lines. But importantly for markets, traders don't seem to care.

The reaction delivered a major risk-on episode, dragging the Aussie and Kiwi sharply higher. Given both have demonstrated a strong and persistent relationship with riskier asset classes throughout the Iran war, it comes as no surprise.

And the mood music points in only one direction heading into Asia. Stock futures are sharply higher, with the Nikkei up more than 3% and the KOSPI over 7.5% before the start of physical trade. It's possible that when Asian markets open, they drag US equity futures even higher.

Throw in the world's largest IPO, with SpaceX set to start trading on the Nasdaq, and despite the extreme headline hockey that has defined this conflict, you get the sense that unless Iran unveils a nuke or some other extreme inflammatory move, risk wants to rip regardless in Asia.

At face value, and despite hearing the same "imminent deal" story so many times before, that's an environment that may continue to benefit the Aussie and Kiwi.

AUD/USD bullish reversal deserves respect

Source: TradingView

AUD/USD delivered a key bullish reversal on the daily chart on the back of the latest imminent deal headlines. While the scepticism in my bones is probably oozing into the tone of this analysis, it has to be acknowledged that the bullish signal is strengthened given it arrived after an extended bearish trend that saw the Aussie break several key levels in the process.

I have no edge in determining whether this is the actual deal or not, so with the price signal in hand, the best I can offer is levels to watch depending on how the headline hockey evolves.

Overhead, the 100DMA looks set to soon intersect with the November 2025 uptrend around 0.7080, making that the first topside zone to watch. Realistically, to get really excited about an extension of Thursday's move, the price would need to break and hold above 0.7100, putting the 50DMA and 0.7200 in play, both of which have been respected in the recent past.

However, should this prove to be just the latest ticket number in a long line of failed imminent deals, we must also consider downside levels if there is a meaningful escalation in hostilities. If that does eventuate, the pair has been well supported on dips beneath 0.7000 over recent months, including this week. If, for some reason, those bids were to evaporate, the next port of call on the downside may be 0.6964 down to 0.6956, comprising the breakout level from March 31 and the 23.6% Fibonacci retracement of the April 2025 to May 2026 high-low move.

The message from the oscillators currently favours selling into strength, but given the headline-driven environment, that messaging should carry far less weight in my opinion.

NZD/USD: Trading the chop

Source: TradingView

As for NZD/USD, far lower liquidity than its Antipodean FX neighbour, combined with the latest headline hockey, has created a messy, rangebound backdrop for the pair. It too delivered a key bullish reversal candle on the daily chart on Tuesday, seeing the price ram into the 200DMA before stalling, continuing the trend seen over the past week.

The price is still testing that key level into early Asian trade, making it the immediate level to watch overhead. If it manages to extend the bullish move as the signal hints, keep an eye on the price action at 0.5847, the high set earlier this week. If the pair can surpass that, it may accelerate the move, putting the 100DMA or 0.5920 resistance potentially in play. While the 50DMA is located in between, the pair often trades through it like it isn't there, making it a level of note rather than anything more meaningful.

On the downside, 0.5774 is the immediate support level to watch. If it were to break for whatever reason, there's not a lot of visible support seen until 0.5762, the swing low set in April.

The oscillators are delivering a largely neutral signal, fitting with the sideways price action. Let that guide you rather than holding a specific bearish or bullish bias. It's a time to be nimble.