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In opinion of FX Strategists at UOB Group, NZD/USD could have charted a short-term top and is now seen entering into a consolidative phase.

Key Quotes

24-hour view: “We expected NZD to ‘drift lower’ yesterday but we were of the view that ‘the strong support at 0.7010 may not be easy to crack’. However, NZD briefly dropped below 0.7010 (low of 0.7006) before rebounding to close little changed at 0.7042 (+0.01%). The outlook is mixed and NZD could trade between 0.7010 and 0.7065 for today.”

Next 1-3 weeks: “We have held a positive view in NZD for about a month now. Yesterday (07 Dec, spot at 0.7040), we highlighted that ‘momentum continues to deteriorate but confirmation of a short-term top is only upon a break of the ‘strong support’ at 0.7010’. The ‘strong support’ level was breached as NZD dropped to a low of 0.7006. The price action suggests that last Thursday’s (03 Dec) high of 0.7104 is a short-term top. In other words, this level may not come back into the picture within these couple of weeks. Overall, while there is room for NZD to edge lower from here, any weakness is viewed as part of a broader 0.6950/0.7090 range.”