NZD/USD has faced strong resistance in the area just below the 0.6600 mark since early July, with the daily chart visualizing the formation of a possible Double Top, marked by the high from June 10th (0.6585) and the high from July 9th (0.6601).
The daily chart also showcases a bearish divergence between NZD/USD exchange rate and the 14-period RSI. Therefore, a break and close below the 20-period EMA (0.6515) may expose the low from July 14th (0.6503), while a break below that level may drive the pair lower for a test of the 0.6380-0.6410 area, where it had previously received support.
On the other hand, a break and close above the high from July 9th (0.6601) may expose the high from January 16th (0.6665) and then the yearly high of 0.6739 (registered on January 2nd).
As of 6:58 GMT on Monday NZD/USD was inching up 0.02% to trade at 0.6557, while moving within a daily range of 0.6539-0.6564. The major pair lost 0.28% last week, as it snapped a three-week streak of gains.
In terms of macroeconomic calendar, no relevant reports, which may affect NZD/USD valuation, are scheduled to be released on Monday, while trade may be driven mostly by sentiment.
Bond Yield Spread
The spread between 1-year New Zealand and 1-year US bond yields, which reflects the flow of funds in a short term, equaled 9.2 basis points (0.092%) as of 6:15 GMT on Monday, down from 10.4 basis points on July 17th.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 0.6551
R1 – 0.6570
R2 – 0.6584
R3 – 0.6603
R4 – 0.6622
S1 – 0.6537
S2 – 0.6518
S3 – 0.6504
S4 – 0.6489