NZD/USD Technical Analysis: Bull RSI divergence on 4H, yield differential hits 3-month low ahead of RBNZ

The NZD/USD pair is currently trading at 0.6740, having hit a session high of 0.6746 soon before press time. 

The RBNZ is widely expected to keep rates unchanged today and join the dovish chorus of other central banks. The markets have likely priced in the dovish turn, the recent slide in yield differentials indicates. 

The spread between the New Zealand 10-year government bond yield and its US counterpart fell to -0.592 basis points earlier today, the lowest level since Nov. 5. Notably, the spread -0.22 basis points on Jan. 4 and was seen at -0.356 on Jan. 30. 

The NZD, therefore, could pick up a bid if the RBNZ matches market expectations. Validating that bullish case is the positive divergence of the relative strength index (RSI) seen in the chart 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