In opinion of FX Strategists at UOB Group, NZD/USD could have charted a short-term top in the vicinity of the 0.7100 yardstick.
Key Quotes
24-hour view: “Yesterday, we held the view that ‘there is room for NZD to test 0.7080 first before the risk of a pullback would increase’. Our view was not wrong as NZD rose to a high of 0.7084. Overbought conditions coupled with waning momentum suggest further NZD strength is unlikely. From here, barring a break of the major resistance at 0.7100, NZD is likely to drift lower towards 0.7035. The next support at 0.7010 is unlikely to come under threat.”
Next 1-3 weeks: “We have held a positive view in NZD for close to one month now. Yesterday (02 Dec, spot at 0.7055), we indicated that ‘while there is still chance for NZD to move to 0.7100, the month-long rally appears to be over-extended and a break of 0.6980 would indicate that the month-long positive phase has run its course’. NZD subsequently rose to a fresh high of 0.7084. Shorterterm momentum is waning rapidly amid overbought conditions and the risk of a short-term top has increased. A break of 0.7010 (‘strong support’ level previously at 0.6980) would indicate that the month-long positive phase has ended.
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