Divergence of the Bull RSI on 4H, the yield differential reaches its lowest level in 3 months in front of the RBNZ

The NZD / USD is currently trading at 0.6740, after peaking 0.6746 shortly before publication.

The RBNZ is generally expected to maintain its rates unchanged and join the dovish chorus of other central banks. Markets probably anticipated the dovish, as indicated by the recent decline in yield spreads.

The gap between New Zealand's 10-year government bond yield and its US counterpart fell to -0.592 basis points earlier today, its lowest level since the November 5th. The gap was set at -0.22 basis points on Jan. 4. at -0.356 on January 30th.

The NZD could therefore accept an offer if the RBNZ matches market expectations. The validation of this bullish case is the positive divergence of the relative strength index (RSI) observed in the graph 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