NZD/USD approaches the 0.7000 mark on a dampened market mood

The New Zealand dollar climbs for the second straight trading session, despite the risk-off mood in financial markets, courtesy of Moscow, which said they had not seen anything promising or a breakthrough in their peace talks with Ukraine. At the time of writing, the NZD/USD is trading at 0.6980.

Russia-Ukraine negotiations show no progress, as reported by Moscow

Market sentiment turned sour since the European session. Global equities are falling, a consequence of no progress in negotiations between Russia and Ukraine, which added to the current high inflationary scenario, threatens to derail the post-pandemic economic recovery. Of late, the Polish Deputy Prime Minister said that Russia is preparing for a new attack in Ukraine and all indications are that we are facing a long war, according to Aljazeera tweets. In the same tone, the French Foreign Minister stated that negotiations between Russia and Ukraine have not progressed.

Aside from this, the NZD/USD remains buoyant, despite the dismal market sentiment, in part lifted by a softer greenback, as portrayed by the US Dollar Index, down 0.55%, currently at 97.870. Also, the 2 to the 10-year yield curve, which inverted at a time on Tuesday, stays almost flat, but with the 10-year yields above 2-year, each one sitting at 2.373% and 2.332%, respectively.

An absent New Zealand economic docket would keep NZD/USD traders focused on US macroeconomic data and more Fed speaking.

Earlier in the North American session, the US economic docket featured ADP Employment Report, which showed that private companies added 455K jobs to the economy in March, higher than the 450K estimated, a prelude for Friday’s Nonfarm Payrolls report. Also, the US economy in the Q4 of 2021 grew at its highest pace since 2020’s Q3. In its final reading, US GDP grew by 6.9%, a tick slower than the 7.0% foreseen.

Later, Richmond Fed President Tomas Barkin said that he’s open to raising rates by 50-bps at the May meeting, depending on how strong is the US economy.

NZD/USD Price Forecast: Technical outlook

The NZD/USD reached a YTD high, but short of the 0.7000 mark, though retreated afterwards. However, on Tuesday, the pair broke above the 200-day moving average (DMA) at 0.6908, a signal that the NZD/USD could aim higher. Also, the Relative Strength Index (RSI), a momentum indicator, points upward at 63.46, with room to spare before reaching overbought levels.

With that said, the NZD/USD’s first resistance would be the 0.7000 mark. Breach of the latter would expose the descending channel downslope top-trendline around the 0.7050-70 range, followed by 0.7100.