NZD/USD trades at fresh daily lows near 0.6750

• NZD/USD sinks as risk appetite suffers in the face of the latest Ukraine crisis headlines. 
• The Fed will move into the spotlight as the next major risk for forex.

NZD/USD has moved in on a critical area of potential demand in the lows made in recent trade. At the time of writing, NZD/USD is trading at 0.6747, a few pips shy of the lows at 0.6745 as risk-off sentiment takes hold of the forex market.

• US tells allies China signalled openness to provide Russia with military support

There are reports that the US has told allies that China signalled its willingness to provide military assistance to Russia, according to officials familiar with American diplomatic wires on the exchange. This has weighed on risk appetite evident in the moves lower in US stocks as a choppy session draws towards a bearish close for the start of the week.

''The Kiwi continued its decline overnight and is in the midst of extending losses as we go to print this morning. While the move wasn’t particularly outsized, it is over a cent off highs and the drivers appear to be softer commodity prices, late weakness in US equities, and Chinese economic growth concerns, all of which has knocked the AUD too.,'' analysts at ANZ Bank explained.

''So, the week hasn’t gotten off to a good start for the Kiwi, and although there is some domestic data coming up this week (which should be pretty good and which we think might be more influential) global events continue to dominate sentiment. Technically, the break of 0.6775 about 2hrs ago doesn’t bode well, and the sharp rise in US bond yields might keep the USD bid. Markets remain very skittish and more volatility seems likely.''

Eyes on the Fed

Meanwhile, the probability that policymakers at the Federal Reserve will increase the Fed funds rate to 0.25%-to-0.5% on Wednesday from the current zero-to-0.25% is 99.8%, according to the CME Group's Fed Watch Tool. The probability for a 25 basis-point increase was below 40% a month ago, and the chances for a 50 basis-point jump was more than 60%. ''We continue to believe that the terminal Fed Funds rate will have to be much higher.  If and when the market comes around to our view, U.S. rates at the short end should continue to rise,'' analysts at Brown Brothers Harriman argued, in favour of a strong US dollar.