NZD/USD: Further upside not favoured for the time being – UOB

In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, NZD/USD is now likely to trade within a range bound theme.

Key Quotes

24-hour view: Yesterday, we indicated that NZD “is likely to break above 0.5945.” However, we held the view that it “does not appear to have enough momentum to threaten the next major resistance at 0.6010. While our view turned out to be correct as NZD rose to 0.5985 in NY trade, we did not anticipate the sharp selloff from the high. The sharp drop from the high has room to extend, but a sustained drop below 0.5900 appears unlikely. Resistance is at 0.5945, followed by 0.5965. 

Next 1-3 weeks: We expected NZD to trade in a range of 0.5860/0.5960 for more than a week, until yesterday (20 Sep, spot at 0.5945), when we indicated that “the resistance at 0.5960 is likely to give way, and NZD is likely to trade with an upward bias towards 0.6010.” NZD then rose sharply, but briefly, to 0.5985 before dropping back down. The momentum buildup has eased, and the upward bias has faded. To put it another way, NZD is likely to trade in a range for now, probably between 0.5870 and 0.5985.