Although Zionism and Jewish religious observance have been at odds with each other, this may be because many early Zionists felt oppressed by the orthodoxy of some Jewish teachings. The encouragement to reject the "old way" of thinking led some Jews to begin the practice of eating bacon on Yom Kippur (for those who don't know, pigs aren't kosher), a highly symbolic rejection of Jewish traditions and beliefs.
In addition, statements and positions of the more militant factions of the Zionist movement have led to the belief that Zionists in general are fascist, that they support the subjugation of other peoples, or even the obliteration of the Arab/Palestinian people. I would say, however, at this point it is the religious, Orthodox Jews who are more likely to oppose the current peace process.
There are many movements which, although Zionist, continue to follow Jewish religious traditions and which also vehemently oppose fascist "Zionist" factions. Habonim Dror is one such example.