NZD/USD has now likely moved into a consolidative phase between 0.7100 and 0.7250, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Yesterday, we highlighted that ‘despite the relatively strong advance, upward momentum has not improved by much and NZD is unlikely to move above Friday’s top at 0.7225’. We added, ‘NZD is more likely to consolidate and trade between 0.7140 and 0.7210’. While our view was not wrong, NZD traded within a narrower range than expected (0.7151/0.7201). Downward momentum is beginning to improve but while NZD is likely to weaken, it is unlikely to threaten last week’s low near 0.7105 (0.7120 is already quite a strong support). On the upside, resistance is at 0.7175 but only a break of 0.7195 would indicate the current downside risk has dissipated.”
Next 1-3 weeks: “We highlighted last Friday (28 Jan, spot at 0.7140) that ‘risk for NZD has shifted to the downside’. We added, ‘break of solid support at 0.7100 would open up the way for a move to 0.7060’. However, NZD not only did not break 0.7100, it rebounded last Friday and took out the ‘strong resistance’ at 0.7220 (high of 0.7225). Downward pressure has eased and from here, NZD could trade between 0.7100 and 0.7250 for a period of time.”
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