February 14, 2022 15:15:49

The dollar is enjoying its fifth day of gains in seven as the greenback benefits from the ongoing march to war in the Ukraine and Fed rate hike speculation. The greenback is attracting safe haven flows along with the yen and swiss franc, which will continue to be the case until a diplomatic solution is in sight. The Fed’s Bullard has also doubled down today on his hawkish views from last week with more Fed officials due on the wires in the upcoming days.

In this risk averse environment, pro-cyclical currencies tied to stronger growth are getting sold with NZD the worst performing major today. That said, the kiwi should find some support if the RBNZ acts soon, if geopolitical tensions abate. The market is pricing in nearly six rate hikes this year with decent domestic fundamentals in play.

NZD/USD rolling over towards pivot lows

Technically, the major has been in a medium-term downtrend since topping out above 0.72 in late October last year. Prices then broke down in late January below the mid-December support lows around 0.67.

The pair suffered seven days of straight selling into the end of last month making a new pivot bottom at 0.6529. This pushed the major into oversold territory on several indicators and it rebounded above the 21-day SMA at 0.6666.

But the reversal candlestick on Thursday warned the bounce would fail and prices have rolled over, touching 0.66 today. Bears will target the pivot low and then long-term lows at 0.6424/32. Of course, if the Ukraine concerns do settle, buyers will want to stabilise above the 21-day SMA before looking to break trendline resistance and the 50-day SMA at 0.6738.