- New Zealand dollar pulls back from last week’s highs on bearish market sentiment.
- Fed’s Powell: If necessary, the Fed would raise rates more than 25 bps in a meeting or meetings.
- NZD/USD Price Forecast: Neutral to the Upside, Daily Close Above 200 DMA Required to Extend Uptrend Further.
The NZD/USD starts the week with a loss, as it falls during the American session amid a risk-averse mood, due to the continuation of the Russian invasion of Ukraine, while peace talks stall. At the time of writing, the AUD/USD is trading at 0.6892.
Fed speech and geopolitical nerves make headlines
Meanwhile, US Federal Reserve Chairman Powell is crossing the news wires. He said economic projections could become outdated at times like this. In addition, he said the Fed’s actions and balance sheet reductions would bring inflation to the bank’s target of 2% in three years. Powell added that the central bank would set policy taking into account the actual progress of inflation and stressed that the Fed would raise more than 25 basis points if necessary.
On the other hand, the Russia-Ukraine conflict continues for the fourth consecutive week. Over the weekend, Ukrainian President Zelensky said he was ready to negotiate with Russian President Vladimir Putin, but Turkish officials said Putin was not. In addition, Moscow said that the progress of the talks with Ukraine is not as great as it should be, reversing what he told the Financial Times last week.
Apart from this, in the last week, the US central bank raised rates for the first time in three years and also indicated that it is ready to raise rates six more times until 2022, according to the dot plot shown. . Markets have begun to price in expectations as the Fed’s speech dominates the US economic docket.
On Monday, Atlanta Fed President Raphael Bostic said he predicts six hikes in 2022 and said he would be “comfortable” if the Fed needs to hike aggressively. Bostic added that inflation would return to 2% by 2024 and reach 4.1% by the end of the year.
NZD/USD Price Forecast: Technical Outlook
NZD/USD is neutral to the upside but faces solid resistance at 0.6910, the 200-day moving average (DMA). However, NZD/USD has broken above the 50 and 100 DMAs since last Wednesday, but a daily close above the 200 DMA is required to further extend the uptrend.
That said, the first resistance for the NZD/USD would be 0.6900. A break of the latter would expose the 0.7000 mark, followed by the upper trend line of a descending channel around the 0.7050-70 area, and then the 0.7100 psychological level.
Additional technical levels
Source: Fx Street
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