- Kiwi struggles to cut through offers around 0.76.
- Overbought technical conditions at play?
- Focus on US-NZ yield spread and US government shutdown.
The NZD/USD is struggling to rise above 0.76 in a convincing manner for the fifth straight session.
Having rallied 7.67 percent from the November low of 0.6780, the pair looks overbought as per daily RSI. Still, the downside has been capped near 0.7230 this week, courtesy of broad-based US dollar weakness.
The story has not changed much this Friday. The US 10-year treasury yield rose above 2.63 percent; the highest level since December 2016. Still, the USD has failed to catch a bid. Also, keeping USD no the back foot are fears of a US government shutdown.
Earlier today, the US House of Representatives passed a bill to fund government operations through Feb. 16. However, the bill still needs an approval by the Senate, where it faces an uncertain future.
That said, there is always a risk of market attention shifting back to rising yields, in which case, NZD/USD could see a deeper pullback.
NZD/USD Technical Levels
A move above 0.7331 (Jan. 17 high) would open up upside towards 0.7364 (Sep. 21 high) and 0.7434 (Sep. 20 high). On the downside, support is seen at 0.7235 (Jan. 17 low) ahead of 0.72 (zero levels) and 0.7131 (Aug. 31 low).