In opinion of FX Strategists at UOB Group, NZD/USD could extend the recovery to levels beyond 0.6600 in the next weeks.
Key Quotes
24-hour view: “We held the view yesterday that NZD ‘could edge near to 0.6550 first before a pullback can be expected’. The subsequent strength in NZD exceeded our expectation as it rose to 0.6567 before ending the day on a firm note at 0.6559 (+0.86%). Conditions remain severely overbought but the current advance is not showing any sign of weakness just yet. From here, NZD could grind higher and test the 0.6600 level. For today, a sustained advance above this level is unlikely. Support is at 0.6530 followed by 0.6500.”
Next 1-3 weeks: “We have held a positive view in NZD for more than 2 weeks. In our latest narrative from last Friday (05 Jun, spot at 0.6460), we indicated that ‘the prospect for NZD to extend to 0.6550 is not that high for now’. However, amid severely overbought conditions, NZD managed to move above 0.6550 yesterday (08 Jun) and touched a high of 0.6567. Conditions remain overbought but the resilient rally in NZD appears not ready to ‘call it a day” just yet. That said, any further advance is expected to be at a slow pace. The next resistance from here is at 0.6600 followed by 0.6630. On the downside, a breach of 0.6450 (‘strong support’ level previously at 0.6410) would indicate that the positive phase has come to an end.”
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