The New Zealand Dollar (NZD) could test the resistance at 0.6370 before the risk of a pullback increases; a sustained break above this level is unlikely. In the longer run, NZD is likely to rise above 0.6370; it is unclear if there is sufficient momentum for it to reach 0.6410, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Can try testing the resistance at 0.6370
24-HOUR VIEW: “Our view for NZD to ‘continue to rise’ last Friday was correct, but we did not expect it to break above 0.6355 (high has been 0.6367). The rapid rise seems to be overdone, but NZD could test the resistance at 0.6370 before the risk of a pullback increases. A sustained break above 0.6370 is unlikely today. To maintain the momentum, NZD must remain above 0.6305 with minor support at 0.6325.”
1-3 WEEKS VIEW: “We turned neutral in NZD last Thursday (26 Sep, 0.6260), indicating that it ‘is likely to trade between 0.6200 and 0.6340.’ After NZD rose and approached 0.6340, we indicated on Friday (27 Sep, spot at 0.6325) that ‘despite the advance, upward momentum has not increased much, and to continue to advance, NZD must break clearly above 0.6355.’ NZD subsequently rose to 0.6367 in NY trade. From here, we expect NZD to rise above 0.6370, but it is unclear for now if there is sufficient momentum for it to reach last July’s high, near 0.6410. To keep the momentum going, NZD must not break below 0.6280 (‘strong support’ level was at 0.6240 last Friday).”
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