NZD/USD: Signs of bearish exhaustion as US yields sag

• NZD/USD created doji on Friday, signaling bearish exhaustion.
• Sagging US yields seem to have put the brakes on the US dollar rally.

The NZD/USD created a small dog on Friday - a candlestick pattern which suggests indecision in the marketplace.

However, when viewed against the backdrop of the recent sell-off from the March 14 high of 0.7395, the doji candle indices bearish exhaustion.

It appears the USD rally has stalled, courtesy of the 10-year treasury yield's inability to move above the 3 percent mark in a convincing manner. The dollar index, which tracks the value of the greenback, against major currencies, backed-off from the 4.5-month high of 93.46 last week after soft US consumer price index (CPI) reduced the odds of faster Fed rate hikes.   

As of writing, the 10-year treasury yield is trading at 2.97 percent and the Kiwi is mildly big above 0.6970.

A close today above 0.6987 (Friday's doji candle high) would confirm a bullish doji reversal - short-term bearish-to-bullish trend change.

NZD/USD Technical Levels

The oversold readings on the 14-day relative strength index (RSI) add credence to Friday's doji candle and indicate scope for a corrective rally. The gains could be limited as long as the short-term moving averages (MA) - 5-day MA and the 10-day MA are trending south in favor of the bears.

Key resistance: 0.6985 (May 2 low), 0.7019 (23.6% Fib R of recent sell-off), 0.7053 (May 4 high).

Key support: 0.6953 (session low), 0.6945 (Nov. 28 high), 0.69 (psychological support).