NZD/USD Technical Analysis: Bull RSI divergence on 4H, yield differential hits 3-month low ahead of RBNZ

Omkar Godbole FXStreet Contributor

The NZD/USD pair is currently trading at 0.6740, having hit a session high of 0.6746 soon before press time.

The RBNZ is widely expected to keep rates unchanged today and join the dovish chorus of other central banks. The markets have likely priced in the dovish turn, the recent slide in yield differentials indicates.

The spread between the New Zealand 10-year government bond yield and its US counterpart fell to -0.592 basis points earlier today, the lowest level since Nov. 5. Notably, the spread stood at -0.22 basis points on Jan. 4 and was seen at -0.356 on Jan. 30.

The NZD, therefore, could pick up a bid if the RBNZ matches market expectations. Validating that bullish case is the positive divergence of the relative strength index (RSI) seen in the chart below.

4-hour chart

The bullish divergence would be invalidated if RBNZ sounds more dovish than expected, sending the pair below 0.6720.

Trend: neutral

NZD/USD

Overview:
    Today Last Price: 0.6740
    Today Daily change: 3 pips
    Today Daily change %: 0.01%
    Today Daily Open: 0.6739
Trends:
    Daily SMA20: 0.6805
    Daily SMA50: 0.6791
    Daily SMA100: 0.6726
    Daily SMA200: 0.6755
Levels:
    Previous Daily High: 0.6745
    Previous Daily Low: 0.6719
    Previous Weekly High: 0.6907
    Previous Weekly Low: 0.6729
    Previous Monthly High: 0.694
    Previous Monthly Low: 0.6516
    Daily Fibonacci 38.2%: 0.6735
    Daily Fibonacci 61.8%: 0.6729
    Daily Pivot Point S1: 0.6724
    Daily Pivot Point S2: 0.6708
    Daily Pivot Point S3: 0.6698
    Daily Pivot Point R1: 0.675
    Daily Pivot Point R2: 0.676
    Daily Pivot Point R3: 0.6776

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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