NZD/USD retreats from daily highs to 0.6605 despite Russia troop withdrawal

• The NZD/USD eyes to break below 0.6600 amid tensions on the Russian/Ukraine conflict.
• The market mood is upbeat, as portrayed by risk-sensitive currencies.
• NZD/USD is downward biased, but it could shift to neutral if NZD buyers achieve a daily close above 0.6650.

The NZD/USD extends to four days of losses in the North American session, courtesy of the financial markets’ risk-off environment since Friday. At the time of writing is trading at 0.6605.

Risk appetite is back so far. Updates crossing the wires that some Russian troops are returning to the base provided a lift up on US equity futures, while European bourses are in the green. The Russia/Ukraine narrative shift towards a diplomatic exit boosted risk-sensitive currencies to the detriment of safe-haven peers, namely the USD and the JPY.

In the meantime, around  14:23 GMT, it crossed the wires that Russian President Vladimir Putin does not want war in Europe but reiterated that his proposals had not been answered and the decision about a partial withdrawal of troops has been taken.

US Producer Prices approach the 10% barrier

Before the Wall Street Open, the US Bureau of Labor reported that the Producer Price Index (PPI) for January rose by 9.7% y/y, unchanged per the December reading but higher than the 9.1% estimated by analysts. On Core PPI metrics, they came at 8.3% y/y, lower than the 8.5% from December but larger than the 7.9% foreseen.

In the Asian Pacific session, New Zealand and China modernized their 2008 free-trade agreement (FTA). The NZ Minister of Trade and Export Growth Damien O’Connor said that “our primary industry exports forecast to hit a record $50 billion this year alone.”

Meanwhile, the NZ economic docket featured Tourist Arrivals for December increased to 4.4%, from 3.8%, in the November reading.

NZD/USD Price Forecast: Technical outlook

The NZD/USD is downward biased, as depicted by recent price action in the daily chart. The location of the daily moving averages (DMAs) above the spot price confirms the aforementioned. Failure to reclaim the 50-DMA at 0.6742 on February 10 exerted downward pressure on the pair, retreating towards the 0.6500 area before reclaiming the 0.6600 figure, on improved risk market mood.

However, to shift the NZD/USD outlook to a neutral bias, NZD bulls would need to place a daily close above February 14 0.6650 daily high. In that event, the NZD/USD could probe the 0.6700 figure alongside the 50-DMA at 0.6734. Otherwise,  the NZD/USD first support would be February 4 daily low at 0.6589, followed by January 28 daily low at 0.6529.