In opinion of FX Strategists at UOB Group, NZD/USD is likely to attempt some consolidation ahead of a potential test of 0.7340.
Key Quotes
24-hour view: “While we expected NZD to move higher yesterday, we were of the view that ‘overbought conditions suggests that 0.7300 could be out of reach’. However, NZD rose to 0.7314 before settling at 0.7295 (+0.61%). Conditions remain overbought further and sustained NZD strength is unlikely. NZD is more likely to consolidate at these higher levels, expected to be within a 0.7245/0.7320 range.”
Next 1-3 weeks: “We highlighted yesterday that ‘upward momentum has improved considerably and NZD is expected to strengthen further’. That said, we did not quite expect the swift manner by which NZD moved above 0.7300 (high of 0.7314). While the positive phase remains intact, overbought shorter-term conditions could lead to a couple of days of consolidation first. As long as 0.7200 is not taken out (‘strong support’ level was at 0.7170 yesterday), NZD is likely to move to 0.7340 later on. The next resistance is at 0.7380.”
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