NZD/USD bulls face-off with bears and meet an important area of resistance

• NZD/USD bulls fly into a wall of resistance.
• Bears could be lurking and eager for a discount.

At 0.6490, NZD/USD is holding on to bullish territory but looking over the abyss following Monday's roller-coaster ride where the price fell to a low of 0.6422 in mid-day Asia trade. The bird is not airborne again but is up against four-hour resistance around 0.65 the figure. 

''The bounce off overnight lows looks to have been courtesy of broad USD weakness as bond yields there slip back below 3%,'' analysts at ANZ Bank noted. As measured by the 10-year Treasury yield, US yields are falling on the second day of trade this week, down from the 3.062% highs to lows of 2.963%. Consequently, the greenback was dropping to the lows of the day near 102.26 at the time of writing, as measured by the US dollar index (DXY), vs. a basket of six currencies.

''There is no local data today, and the Kiwi is likely to continue to dance to a global beat, and it’s arguable that the greatest source of downside is USD weakness, whereas domestic factors (hard landing etc) appear to pose more downside risks,'' the analysts at ANZ Bank said. 

In prior notes, the analysts explained that ''higher rates are helping the Kiwi (that’s evident in NZD/AUD) but it’s likely that the May MPS marked peak RBNZ ‘hawkish surprise’. It’s hard to see future MPSs being so hawkish relative to market expectations; that makes us more cautious than otherwise on the NZD’s prospects. Fears of a hard landing here also continue to percolate; that’s another potential NZD headwind.''

NZD/USD technical analysis

The price is meeting a key resistance area and if this were to hold, the bias will be on the downside again for a potential lower low within the broader bear trend.