NZD/USD inches back closer to YTD peak, eyes 0.7000 mark amid broad-based USD weakness

• NZD/USD gained traction for the second successive day on Wednesday amid sustained USD selling.
• Scepticism over Russia-Ukraine peace talks failed to impress the USD bulls or hinder the positive move.
• Investors now look forward to the US ADP report and the final Q4 GDP print for some trading impetus.

The NZD/USD pair extended its steady intraday ascent and climbed to a fresh daily high, back closer to the 0.7000 psychological mark heading into the North American session.

The pair attracted some dip-buying in the vicinity of the 0.6900 mark on Wednesday and build on the overnight goodish rebound from the one-week low. This marked the second successive day of a positive move and was sponsored by the heavily offered tone surrounding the US dollar.

Despite not so encouraging geopolitical headlines, investors remain optimistic about a diplomatic solution to end the war in Ukraine. This, in turn, was seen as a key factor that dented the greenback's status as the global reserve currency and acted as a tailwind for the NZD/USD pair.

In the latest developments surrounding the Russia-Ukraine saga, a Kremlin spokesperson said that they have not noticed anything that looks like a breakthrough in negotiations. Moreover, an adviser to Ukraine’s President noted that Russia transferring forces from Kyiv to encircle troops in the east.

This comes after the United States said on Tuesday that it has not seen signs of real seriousness from Russia in pursuing peace. Adding to this, a Pentagon spokesman said that Kyiv remains under threat even after Russia promised to scale back military operations in Ukraine’s capital city.

This, in turn, tempered investors' appetite for riskier assets, which was evident from the modest decline in the equity markets, though did little to lend any support to the buck. The USD bulls also seemed unimpressed by elevated US Treasury bond yields, bolstered by hawkish Fed expectations.

It would now be interesting to see if bulls are able to capitalize on the move or the NZD/USD pair continues with its struggle to make it through the 0.7000 psychological mark. Traders now look forward to the US ADP report and the final Q4 GDP print for some short-term opportunities.

Technical levels to watch