In opinion of FX Strategists at UOB Group, NZD/USD is now seen navigating within the 0.7110-0.7240 range in the next weeks.
24-hour view: “The strong surge in NZD to an overnight high of 0.7174 came as a surprise (we were expecting NZD to trade sideways). The rapid rise appears to be running ahead of itself and while NZD could test 0.7200, a sustained advance above this level is unlikely (next resistance is at 0.7220). On the downside, a break of 0.7140 would indicate the current upward pressure has eased (minor support is at 0.7160).”
Next 1-3 weeks: “We noted on Monday (18 Jan, spot at 0.7125) that ‘downside risk has increased but only a break of 0.7080 would indicate the start of a deeper and more sustained pullback’. We added, ‘the prospect for such a move is quite high as long as NZD does not move above 0.7200 (‘strong resistance’ level) within these few days’. While 0.7200 is still intact, the strong bounce yesterday has resulted in a loss in momentum and the risk for NZD weakness has more or less dissipated. From here, NZD is likely to trade between 0.7110 and 0.7240 for a period of time.”
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