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In light of the recent price action, NZD/USD could extend its recovery further north, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday the “strong rebound in NZD could extend higher” but held the view “the major 0.6300 level is likely out of reach”. The subsequent NZD strength exceeded our expectation as it surged to an overnight high of 0.6316. While over-extended, the current NZD strength has room to test the next resistance at 0.6330 before a more sustained pullback can be expected. On the downside, a break of 0.6270 (minor support at 0.6285) would suggest the current NZD strength has run its course”.

Next 1-3 weeks: “Despite the sharp and rapid drop to 0.6204 on Tuesday, we highlighted on Wednesday (02 Oct, spot at 0.6245) that “oversold conditions suggest that further weakness is likely only if NZD were to register a NY close below 0.6200″. We added, “meanwhile, NZD could trade between 0.6200 and 0.6300 for a few days”. Instead of trading sideways, NZD burst above the strong 0.6300 yesterday (03 Oct) and touched 0.6316 before closing on a firm note at 0.6298 (+0.43%). The price action has increased the risk of a strong and sustained recovery in the coming days. From here, barring a move below the ‘strong support’ level of 0.6255, NZD could move above 0.6350. For now, the next 0.6390 resistance is likely out of reach”.