NZD/USD: Further upside in store above 0.6045 – UOB

NZD/USD needs to clear the 0.6045 region to allow for a potential advance to the 0.6100 zone, note UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: Yesterday, we held the view that NZD “is likely to edge above 0.6000, but it is unlikely to threaten the major resistance at 0.6025.” NZD strengthened more than expected as it rose to a high of 0.6028. The rapid buildup in momentum suggests NZD could break the next resistance at 0.6045. In view of the overbought conditions, NZD might not be able to maintain a foothold above this level. The upside pressure will ease if NZD breaks below 0.5985 (minor support is at 0.6005).

Next 1-3 weeks: Our latest narrative was from last Friday (06 Oct, spot at 0.5965), wherein the recent downward momentum has eased and NZD is likely to trade in a range between 0.5890 and 0.6025. Yesterday, NZD rose above 0.6025 (high has been 0.6028). Upward momentum is improving, but NZD must break and stay above 0.6045 before a rise towards 0.6100 is likely. Overall, only a breach of the ‘strong support’ level (currently at 0.5960) would indicate that the risk of NZD breaking clearly above 0.6045 has faded.