In opinion of FX Strategists at UOB Group, NZD/USD could attempt a move to the 0.7200 neighbourhood in the next weeks.
Key Quotes
24-hour view: “While our expectation for NZD to strengthen was correct, our view that 0.7100 ‘is unlikely to come into the picture’ was not as NZD rocketed to 0.7150 during NY hours. In view of the solid momentum, NZD is likely to strengthen further even though the rather overbought conditions indicate that the major resistance at 0.7200 is unlikely to come into the picture for now (minor resistance is at 0.7170). On the downside, 0.7090 is expected to be strong enough to hold any pullback (minor support is at 0.7120).”
Next 1-3 weeks: “We highlighted yesterday that ‘shorter-term momentum is showing sign of improving but only a clear break of 0.7100 would indicate that NZD is ready to move higher on a sustained basis’. We did not anticipate the manner by which NZD blast past 0.7100 and rocketed to 0.7150. Rapid improvement in momentum is likely to lead to further NZD strength towards 0.7200. The current positive outlook for NZD is deemed intact as long as it does not move below 0.7065 (‘strong support’ level).”
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