NZD/USD drops despite consolidation in US-NZ 10-yr bond yield spread

Selling in the NZD/USD pair appears to have resumed despite consolidation in the US-NZ 10-year bond yield spread consolidated around -0.70.

Fails to sustain above 50% Fibo

The spot jumped to a high of 0.7014 in Asia before falling back below 0.70 (50% Fibo retracement of 0.6675-0.7325) and extended losses to 0.6982 levels. However, the pair is trading well above previous day’s low of 0.6951 levels and thus the selling interest appears to have stalled on consolidation in the yield spread.

Sharp drop in last seven sessions was marked by an improvement in the yield spread from 00.92 to -0.69 in favor of US dollar. Despite consolidation in the yield spread gains are hard to come as markets see room for two rate cuts by RBNZ.

NZD/USD Technical Levels

The immediate hurdle is noted at 0.70 (50% of 0.6675-0.7325) would expose 0.7033 (5-DMA), above which resistance at 0.7079 (July 6 low) stands exposed. On the other hand, a breakdown of support at 0.6970 (June 24 low) could yield a re-test of yesterday’s low of 0.6951. Further losses could run into psychological support at 0.69.