NZD/USD: Corrective rally stalled at bearish 5-day MA
- NZD/USD failed to beat resistance offered by the descending (bearish) 5-day moving average.
- Bond yield differential favors USD bulls/kiwi bears.
Kiwi created a "long-tailed" hammer-like candlestick yesterday, signaling the sell-off from the April 13 high of 0.7395 may have run out of steam.
The candlestick pattern also added credence to the oversold conditions as represented by the 14-day relative strength index (RSI).
Further, the data released earlier today were NZD supportive. The Bank of New Zealand-Business NZ's seasonally adjusted Performance of Manufacturing Index (PMI) jumped to 58.9 in April from 52.2 the previous month and food prices rose 0.1 percent in April.
Still, the corrective rally ran out of steam at the descending (bearish) 5-day MA of 0.6978 earlier today, possibly due to a worsening yield differential. The 10-year New Zealand-US bond yield spread fell to a new record low of -21.7 basis points in the NZD-negative manner.
Moving ahead - In the short-run, the oversold readings might put a bid under the Kiwi. However, in a larger scheme of things, the currency pair remains at the mercy of the bond yield differential.
NZD/USD Technical Levels
As of writing, the currency pair is trading at 0.6962. The 5, 10-day MA tend south, indicating the short-term bias remains bearish. However, the daily chart shows the relative strength index (RSI) has diverged in the NZD-positive manner. So, a move above the 10-day MA of 0.70 cannot be ruled out.
Resistance: 0.70 (10-day MA), 0.7053 (May 4 high), 0.7073 (Jan. 3 low).
Support: 0.6949 (May 9 low), 0.6903 (previous day's low), 0.6816 (Dec. 1 low).