Further consolidation in NZD/USD is likely between 0.7180 and 0.7300 in the next weeks, noted UOB Group’s FX Strategists.
Key Quotes
24-hour view: “Yesterday, we highlighted that NZD ‘could drift lower to 0.7235’. We added, ‘the major support at 0.7205 is not expected to come under threat’. While our view was not wrong, NZD came close to taking out 0.7205 as it dropped to 0.7210 before rebounding quickly. Downward pressure has waned and NZD is unlikely to weaken further. For today, NZD is more likely to consolidate and trade between 0.7215 and 0.7260.”
Next 1-3 weeks: “Two days ago (01 Jun, spot at 0.74270), we highlighted that ‘while the risk for NZD remains on the upside, lackluster momentum suggests that any advance in NZD is likely to struggle to move clearly above 0.7320’. We added, ‘on the downside, a breach of 0.7205 would indicate that the current upward pressure has eased’. NZD came close to taking out the strong support at 0.7205 as it dropped to 0.7210 yesterday before rebounding. While the strong support is intact, upward momentum has more or less dissipated. In other words, NZD is not expected to move to 0.7320. From here, NZD is likely to trade within a 0.7180/0.7300 range.”
