NZD/USD approaches 0.6900 on broad US dollar weakness

The NZD/USD rallies for the third straight day, erasing most of last week’s losses amid a mixed market sentiment, courtesy of geopolitical concerns, which adds upward inflation pressure, despite efforts of central banks increasing borrowing costs to tame it. At press time, the NZD/USD is trading at 0.6895.

European and US stock indexes whipsaw in the North American session, reflecting investor sentiment. In the FX space, the greenback aims lower, down 0.74%, below the 98 mark at 97.89, while US Treasury yields slide, led by the 10-year benchmark note, down two and a half basis points, sitting at 2.160%, a tailwind for the NZD/USD.

Russia-Ukraine faltering to reach an agreement

Elsewhere, Russia-Ukraine tussles keep grabbing headlines as discussions continue between Kyiv and Moscow. However, they have failed to deliver a “fast-track” solution to the conflict, with Ukraine’s President Zelensky saying that talks are challenging. At the same time, Ukraine’s Defense Minister stated that there is nothing to satisfy Ukraine’s posture. On the Russian front, the Kremlin said that their delegation is putting “colossal energy” into those discussions.

Putting this aside, New Zealand reported 2021’s Q4 GDP, which rose by 3%, short of the 3.2% estimated. On the US front, the US central bank hiked borrowing costs 0.25% and expected to increase the bank’s benchmark rates on at least six occasions by the end of the year. All of the Fed’s monetary policy meetings would be subject to hiking rates, at least 25 bps each.

In the same meeting, Fed board members updated their forecasts. Policymakers expect core PCE to peak around 4.1% before falling to 2.3% in 2024. Regarding growth, the board expects the GDP at 2.8% by year’s end, lower than the 3.8% estimated in December, while the balance sheet reduction would be discussed at “coming meetings.”

Earlier in the North American session, the US docket featured Initial Jobless Claims for the week ending on March 12, which came at 214K, lower than the 220K expected, while Industrial Production for February showed some strength, rose by 7.5%y/y  higher than the 3.6% previous reading.

NZD/USD Price Forecast: Technical outlook

Overnight, the NZD/USD traded on top of the 200-hour simple moving average (SMA), seesawed around the 0.6820-50 range, surging higher near the London Fix, though falling short of breaking above the 0.6900 mark.

The NZD/USD bias is neutral-upwards and is approaching solid resistance around the 0.6900-13 area, which lies the psychological zero resistance and the 200-day moving average(DMA).

Upwards, the NZD/USD first resistance would be 0.6900-13. Breach of that region would sponsor amove towards the YTD high around 0.6925, followed by the 0.7000 figure.