NZD/USD falls and threatens to break under 0.6800

• Despite an ongoing commodities rally, the New Zealand dollar, a commodity-linked currency, fails to capitalize on a softer greenback.
• The market sentiment remains downbeat, as illustrated by global equity indexes.
• NZD/USD Technical Outlook: Downward biased after forming an “inverted hammer” in the daily chart.

NZD/USD falls amid a risk-off market mood and surging commodity prices due to the Russia-Ukraine conflict, which has spurred higher wheat, nickel, and oil prices, with those commodities closely linked to both countries. At 0.6803, the NZD/USD fails to capitalize on a softer US dollar.

Global equity markets remain in a blood bath, recording losses. The greenback weakens across the board some 0.22% though clings to the 99.00 mark, while US Treasury yields rise, led by the 10-year US T-note climbing nine basis points sitting at 1.84%.

With the Russia-Ukraine conflict intensifying, the war remains after three rounds of negotiations. The result of a longer than expected fighting will keep pushing commodity prices higher, increasing fears of stagflation, and in the end, would benefit safe-haven assets, like precious metals and also the buck.

The economic docket for both countries does not have any market-moving news. Late in the week, the US economic docket would feature the Consumer Price Index (CPI) for February, which in the case of rising more than estimated, could influence Fed policymakers on a more significant rate hike than what money market futures have priced in.

NZD/USD Price Forecast: Technical outlook

NZD/USD Tuesday’s price action is subdued, despite the rally in the commodities complex, after forming an inverted hammer, meaning the pair could be headed downwards. The NZD/USD edged up earlier, pierced the 100-day moving average (DMA) at 0.6835, and dipped towards the 38.2% Fibonacci level, bracing to it, which also confluences with February 23 daily high at 0.6809.

That said, the NZD/USD is downward biased. The NZD/USD first support would be 0.6800. Breach of the latter would push the NZD/USD to the confluence of the 50-DMA and the 61.8% Fibonacci retracement around the 0.6723-43 area, followed by the 78.6% Fibonacci retracement at 0.6694.