NZD/USD remains firm and is expected to return to the 0.68 area in the longer run, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “Yesterday, we expected NZD to strengthen but held the view that ‘severely overbought conditions suggest any advance is unlikely to move clearly above 0.6770’. Our view was not wrong as NZD rose to 0.6764 before easing off to close slightly lower at 0.6734 (-0.15%). Upward momentum has waned considerably and the current movement is viewed as the early stages of a consolidation phase. In other words, NZD is expected to trade sideways for today, likely between 0.6710 and 0.6770.”
Next 1-3 weeks: “Our latest narrative for NZD was from last Thursday (27 Aug, spot at 0.6630) wherein ‘surge in momentum could lead to further NZD strength towards 0.6690’. While our expectation for a stronger NZD was correct, we did not quite anticipate the ease by which NZD cracked 0.6690 last Friday and closed higher by a whopping +1.60% (0.6744). The outlook for NZD is still clearly positive even though overbought conditions suggest the major resistance at 0.6800 may not come into the picture so soon. On the downside, the ‘strong support’ level has moved higher to 0.6635 from 0.6545.”
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