- NZD/USD falls from around 0.6975 as market sentiment softened on Russia/Ukraine issues.
- The dollar is holding firm, supported by Fed policymakers.
- Cleveland Fed President Mester adds her name to the list of aggressive Fed members.
- NZD/USD Price Forecast: Break above the 200 DMA changed the bias to the upside, though facing solid resistance around 0.7000.
The NZD/USD falls amid dovish market sentiment on Wednesday, courtesy of rising tensions in the Russia-Ukraine conflict, which took a backseat earlier in the week as the US central bank grabbed the spotlight after raise rates and the Fed spoke. At the time of writing, the NZD/USD is trading at 0.6960.
A reflection of the market mood is in equities, with European and US stock indices falling. In the forex space, the dollar is advancing as shown by the US dollar index, rising 0.35% to 98.760, while the 10-year yield pulls back from weekly highs to 2.366%.
Russia-Ukraine War Update
Ukrainian President Zelensky said that the talks with Russia are contentious and complex. At the same time, Russian Foreign Minister Lavrov commented that NATO’s eastward expansion continues regardless of whether a particular nation is a member. Meanwhile, US President Joe Biden is expected to , announce sanctions on more than 300 members of the lower house of the Russian Parliament on Thursday.
Statements from Fed officials continue
The US economic agenda would feature more speakers from the Fed. Previously, Fed chief Powell spoke about digital currencies, leaving aside monetary policy. Lately, Cleveland Fed President Loretta Mester has added her name to the US central bank’s list of hawks. On Wednesday, Mester said the Fed would need to make 50bps of moves this year while favoring early rate hikes to better position itself for developments in the US economy. She further added that “I am not concerned that rate increases will push the US economy into recession.”
Aside from this, US new home sales in February rose 0.772 million below the 0.81 million estimate, a report mostly ignored by NZD/USD traders.
NZD/USD Price Forecast: Technical Outlook
Tuesday’s price action showed that the NZD/USD pair broke above the 200-day moving average (DMA) at 0.6909, changing the bias from neutral to up, however it faced strong resistance around the 0.6970 area, few pips below 0.7000 psychological level.
With the Relative Strength Index (RSI) as a momentum indicator around 66, with some room before reaching overbought conditions, NZD/USD could test the 0.7000 mark. If that scenario plays out, NZD/USD’s first resistance would be 0.6974, followed by 0.7000, and then the falling trendline of a descending channel around the 0.7050-70 area.
On the other hand, the first support for the NZD/USD would be the 200 DMA at 0.6909. Break of the latter would expose resistance, now support at 0.6890, followed by resistance, now support (23 Feb daily high) at 0.6809.
Technical levels
Source: Fx Street
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