NZD/USD reverses from five-week top towards 0.6700 on risk-off mood

• NZD/USD renews intraday low during the first negative daily performance in eight.
• Fears of imminent Russia invasion of Ukraine weigh on market sentiment, upbeat Fedspeak could be considered as well.
• RBNZ’s Orr justifies recent hikers, signals above neutral rates by this time of 2023.
• Heavily populated US calendar will entertain traders, risk catalysts are the key.

Alike other antipodeans, NZD/USD also portrays the market’s downbeat sentiment by snapping a seven-day uptrend with 0.30% intraday losses during Thursday’s Asian session. That said, the quote recently bounced off the intraday low to 0.6750 by the press time.

NZD/USD bears cheer the escalating fears surrounding the Russia-Ukraine war as Kyiv and the West keep signaling more military troops from Moscow near the border. While identifying the risk of an imminent geopolitical tussle with Russia, Ukraine declared a state of emergency. Additionally, comments US Secretary of State Antony Blinken, who believed Russia will invade Ukraine before the night is over, also portray tense conditions in the market.

In addition to the geopolitical risk, upbeat comments from San Fransisco Fed President Mary Daly also favor the US dollar. The policymaker cited 'more urgency' on rate hikes in her latest speech.

At home, RBNZ Governor Adrian Orr said on Wednesday that the official cash rate (OCR) will be above neutral by this time next year, according to Reuters. The RBNZ Chief blamed inflation for the recently hawkish action.

While portraying the mood, Wall Street marked losses and the S&P 500 Futures also drop 0.85% intraday at the latest. Further, the US 10-year Treasury yields snap two-day rebound by declining 1.5 basis points (bps) to 1.96% by the press time. It should be observed that the US Dollar Index (DXY) rises 0.12% intraday due to its safe-haven appeal.

Looking forward, Russia-Ukraine headlines and Fedspeak will be the key catalysts for the NZD/USD traders. Also important will be the second reading of the US Q4 GDP, expected 7.0% annualized versus 6.9% prior, as well as the US New Home Sales for January and Personal Consumption Expenditure details for the fourth quarter (Q4).

Technical analysis

Despite taking a U-turn from 0.6810, NZD/USD keeps the early-week breakout of the 50-DMA and a descending trend line from October 2021, respectively around 0.67360 and 0.6715. Hence, the pair buyers may remain hopeful until witnessing a clear downside break of 0.6715.