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The upside momentum in NZD/USD is expected to meet a tough hurdle in the 0.6175 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “While we highlighted yesterday that ‘robust momentum suggests NZD could advance further’, we held the view that “a break of last week’s peak at 0.6157 would come as a surprise”. NZD subsequently touched a high of 0.6157 before easing off. The advance is NZD is severely overbought now and further NZD strength is unlikely. For today, NZD is more likely to consolidate and trade between 0.6090 and 0.6160.”

Next 1-3 weeks: “We held a positive view in NZD yesterday (18 May, spot at 0.6040) but were of the view that NZD ‘is unlikely to break the solid resistance at 0.6120’. While the subsequent strong surge in NZD did not take out 0.6120 (overnight high of 0.6117), the strong advance has resulted in a rapid improvement in momentum. From here, NZD is expected to continue to trade with an upward bias even though last month’s peak near 0.6175 is another solid resistance and may be tough to break. The current overall positive outlook is deemed as intact as long as NZD does not move below 0.6000 (‘strong support’ level was at 0.5965 yesterday).”