NZD/USD struggles around mid-0.6700s as Russia-Ukraine tussle escalates

• NZD/USD retreats from one-week high, stays positive for the fourth consecutive week.
• International pressure on Russia intensifies as Moscow gets tough on Kyiv, peace talks in focus.
• Wall Street, US Treasury yields portrayed risk-off mood, benefiting the DXY.
• Second-tier NZ data came in downbeat, eyes on Aussie GDP, statements from US President Biden, Fed Chair Powell.

NZD/USD remains depressed around 0.6750 during the early Wednesday morning in Asia, following a sluggish start to March.

The kiwi pair refreshed weekly top the previous day but closed in the red territory as the Russia-Ukraine crisis intensifies. However, upbeat data from China and receding calls of the Fed’s 0.50% rate hike in March seem to defend the pair buyers.

Russian President Vladimir Putin has already conveyed his wish to continue with the military march in Kyiv until his goal is met. To defend the national interest, Ukraine rushes to get European Union (EU) membership but the casualties keep rising each day.

Recently, the International Monetary Fund (IMF) and World Bank (WB) mentioned, “War in Ukraine creating significant spillover effects in other countries, commodity prices rising, risk driving further fueling inflation.” On the same line, US Treasury Secretary Janet Yellen also said, “The G7 continues to support the removal of key Russian financial companies from SWIFT.

Elsewhere, probabilities over the US Federal Reserve’s (Fed) 0.50% rate hike in March, as per CME’s FedWatch Tool, dropped to 1.7% versus above 50% before a few weeks. The same weigh on the US Treasury yields, down 12 basis points (bps) to 1.71% by the end of Tuesday’s North American session.

It’s worth noting that the Wall Street marked losses to portray the risk-off mood but the market’s rush to risk-safety favored the US Dollar Index (DXY) and gold prices. Additionally, fears to energy supply propelled WTI crude oil prices by over 10% on Tuesday to $106.33 at the latest.

Talking about the data, PMIs from China and the US were upbeat while New Zealand’s Terms of Trade Index for Q4 dropped to -1.0% versus -0.8% expected and 0.7% prior. Further, New Zealand Building Permits for January slumped to -9.2% compared to 0.5% forecasts and 0.6% previous readouts.

Looking forward, US President Joe Biden's State Of The Union (SOTU) speech, around 02:00 GMT, will precede Fed Chair Jerome Powell’s bi-annual testimony to entertain traders. However, major attention will be given to geopolitics. As per the prepared speech, US President Biden emphasized self-reliance to tame inflation while also criticizing the Russian invasion of Ukraine.

Technical analysis

NZD/USD pullback remains elusive beyond the previous resistance line from November 15, 2021, around 0.6740 by the press time. Until then, the kiwi pair can keep February’s high and the 100-DMA, respectively around 0.6810 and 0.6850, on their radar.