NZD/USD extends its losses struggles at 0.6800 on market sentiment

• The NZD/USD gave way to 0.6800 as market sentiment, and the Fed’s first rate hike looms.
• Geopolitics: Russia-Ukraine finally progressed in their talks, but attacks persist.
• NZD/USD Price Forecast: A daily close under 0.6800 would exacerbate a move towards 0.6700 and beyond.

The NZD/USD carried on last Friday’s sentiment as a risk-off market mood dented appetite for riskier assets, meaning commodity-linked currencies and high beta ones. At press time, the NZD/USD is trading just above last Friday’s 0.6797 low, but 0.07% down.

Risk-aversion in the financial market remains. Although news over the weekend indicates that Russia-Ukraine talks finally have progressed, the sentiment would remain fragile. Noteworthy that US Deputy Secretary of State Sherman commented that Russia showed signs of willingness to engage in substantial negotiations about ending the conflict. However, attacks on Ukraine still.

Furthermore, in the Asian session, the sharp pick-up of Covid 19 cases has put Shanghai and Shenzhen into lockdown, suggesting that Chinese authorities are not prepared to back away from their zero-tolerance posture.

Sentiment and the first-rate hike of the Federal Reserve in the middle of the week would keep the NZD/USD pressured. In the last week, US inflation peaked at around 7.9% y/y, its highest level in four decades, though in line with expectations and the previous reading. However, traders would need to be aware that the survey does not reflect the crude oil rally spurred by Russia’s invasion of Ukraine, which will be noted in the next month.

An absent New Zealand and US economic docket would keep traders adrift to market mood. Late in the Asian session, New Zealand would report the Services PMI, whilst the US docket would reveal Producer Price Index (PPI), and the New York Empire State Manufacturing Index.

NZD/USD Price Forecast: Technical outlook

The NZD/USD is downward biased, though trading near the 100-day moving average (DMA) at 0.6821. Overnight, the pair dipped towards the 50% Fibonacci level at 0.6778, though it jumped to near the 0.6800 mark. Since then, the NZD/USD has been seesawing up/down the figure.

IF NZD/USD bull would like to remain hopeful of higher prices, they would need to hold the NZD/USD above 0.6800. A breach of the latter would exacerbate a downward move, which could push the pair lower. The first support would be the 50% Fibonacci and today’s low at 0.6773. Once giving way, the next stop would be the 61.8% Fibonacci at 0.6743, immediately followed by the 78.6% retracement at 0.6693.