NZD/USD Hovers Near Key Support Level Amid Widening Yield Gap

The New Zealand dollar is hovering near its support level of 0.5600 as it trades just under 0.5700, its lowest since early July.

This area has acted as a strong floor since April and could be a prime location for potential reversal plays.

The gap between US and New Zealand bond yields is widening, with two-year US Treasury yields climbing to 4.9% on the back of resilient US business surveys.

The Reserve Bank of New Zealand recently held its Official Cash Rate at 2.75% and signaled no further hikes until December, while US traders are pricing in a 55% chance of a Fed rate hike on October 28.