It's a familiar case of one step forward, two steps back for the kiwi
The jump in the kiwi came after solid inflation figures earlier in the day and that saw NZD/USD move to a high of 0.6596. However, the upside move stalled as price fails to take out the 61.8 retracement level and offers at around 0.6600.
Since then, it's been a slow and steady decline for the pair as it looks to move towards flat levels on the day. The dollar is holding up well ahead of European trading as risk sentiment improves a little, but the kiwi's lack of shine isn't anything new really.
With the RBNZ still in limbo with regards to a rate hike or rate cut, along with a tepid economy, it continues to make for a very tough time for the kiwi to sustain any rallies this year. Add to the fact that the Fed is continuing to hike and yields spread continues to move in favour of the dollar, there's not much of a fundamental case to keep the kiwi bid for too long against the greenback.
And that is shown in the charts as well. Since the sharp move lower in April, NZD/USD has been on a steady track lower with the pattern of lower highs, lower lows continuing to develop. And unless that breaks, the play is still to sell the kiwi on rallies here.
Only if NZD/USD holds a break above 0.6700 (September high) from the current upside move does it suggest the pattern starting to break. Otherwise, there's not much of a reason to believe the most recent rally will be any different to what we have seen so far this year.
