NZD/USD sticks to gain above 0.6700, lacks bullish conviction amid Russia-Ukraine crisis

• NZD/USD regained positive traction on the last day of the week amid a further USD pullback
• Hopes for a ceasefire undermined the safe-haven USD and benefitted the perceived riskier kiwi.
• The risk of a further escalation in geopolitical tensions might keep a lid on any further gains.

The NZD/USD pair held on to its modest intraday gains through the early European session and was last seen trading near around the 0.6710-0.6715 region, up 0.10% for the day.

The pair built on the overnight late recovery from the weekly low, around 0.6630 area, and gained some positive traction on the last day of the week, though the uptick lacked bullish conviction. The latest optimism over Putin-Zelenskyy meet on likely ceasefire weighed on the safe-haven US dollar. This, in turn, was seen as a key factor that extended some support to the perceived riskier kiwi.

Russian President's press secretary Dmitry Peskov said that Putin was ready to talk with Ukrainian President Volodymyr Zelenskyy if the latter agrees to compromise on Russia’s red line issues. Moreover, reports indicated that Russian troops stopped from advancing in most directions. Traders further took cues from the fact that the new economic sanctions on Russia were not as harsh as feared.

It, however, remains to be seen if the NZD/USD pair is able to capitalize on the move or meets with a fresh supply at higher levels amid the risk of a further escalation in geopolitical tensions. Hence, it will be prudent to wait for strong follow-through buying before confirming that this week's sharp pullback from over one-month high - levels just above the 0.6800 mark - has run its course.

Market participants now look forward to the US economic docket, highlighting the release of the Fed's preferred inflation gauge - the core PCE Price Index - and Durable Goods Orders. The data, however, might do little to influence the USD price dynamics or provide any meaningful impetus to the USD/JPY pair as the market focus remains glued to developments surrounding the Russia-Ukraine saga.

Technical levels to watch