NZD/USD clocks fresh 4-month high of 0.7354

• Kiwi rises after previous day's bullish outside day candle. 
• Likely led higher by broad-based USD weakness. 
• Rally contradicts depressed NZ-US yield differential. 

Having built a base around 0.7261 (61.8% Fib R of July-Nov drop) last week, Kiwi jumped to a fresh 4-month high of 0.7354 today.

As of writing, the currency pair is trading at 0.7347 levels and looks set to extend gains, courtesy of yesterday's bullish outside day candle, ascending 5-day MA and 10-day MA and broad-based USD weakness. 

However, the rally contradicts the depressed yield differential. The spread between the NZ 10-year bond yield and its US counterpart fell to 26.3 basis in December; the lowest since records began in late 1994 and since then has remained depressed around 35 basis points. That said, the correlation between the rising Treasury yields and the US dollars seems to have broken down. So, the Kiwi could remain well bid, unless the fourth quarter CPI data misses estimates by a big margin. 

NZD/USD Technical Levels

A break above 0.7364 (Sep. 21 high) would open up upside towards 0.74 (psychological level) and 0.7434 (Sep. 20 high). On the downside, breach of support at 0.73 (zero levels) would expose 0.7279 (upward sloping 10-day MA) and 0.7235 (Jan. 17 low).