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In view of FX Strategists at UOB Group, the corrective up move in NZD/USD carries the potential to extend beyond 0.6450 and test 0.6500.

Key Quotes

24-hour view: “NZD traded sideways between 0.6414 and 0.6444 yesterday, narrower than our expected 0.6400/0.6450 range. The current movement is still viewed as consolidation phase and NZD is likely to continue to trade sideways for now. That said, the weakened underlying tone suggests a lower trading range of 0.6400/0.6440″.

Next 1-3 weeks: “While we have held the view that NZD is “likely to test the top of the expected sideway trading range of 0.6290/0.6410 first” since last Wednesday (04 Sep, spot at 0.6335), the pace and extent of NZD strength exceeded our anticipation. NZD surged above 0.6410 last Friday (06 Sep) and touched 0.6444 before ending the day higher by a whopping +0.84% (largest 1-day gain in 3 months). We indicated earlier on Friday that “if NZD were to move clearly above 0.6410, it would suggest a stronger recovery to 0.6450, possibly 0.6500″. In other words, the current recovery in NZD could move above 0.6450 but the odds for 0.6500 are not as high. On the downside, only a break 0.6365 would suggest the recovery in NZD has run its course”.