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In opinion of FX Strategists at UOB Group, the recovery in NZD/USD still faces strong resistance in the 0.6120 region.

Key Quotes

24-hour view: “The sudden and strong surge in NZD came as a surprise. While the rapid rise in running ahead of itself, there is scope for NZD to test the 0.6075 resistance. For today, the next resistance at 0.6100 is likely out of reach. Support is at 0.6020 followed by 0.5995.”

Next 1-3 weeks: “While we identified 0.5920 as a solid support and cautioned yesterday (18 May, spot at 0.5950) that NZD ‘has to close below this level before further decline can be expected’, we did not anticipate the outsized rebound (NZD closed at 0.6038, up by a whopping +1.74%). Our ‘strong resistance’ level at 0.6025 was easily taken out and NZD has likely made a short-term bottom at 0.5921 last Friday. From here, further NZD gain is not ruled but at this stage, a clear break of the solid resistance at 0.6120 appears unlikely. All in, NZD is expected to trade with a positive note as long as it does not move below 0.5965 within these few days.”