NZD/USD now points to some consolidation – UOB

NZD/USD is now expected to navigate within the 0.5610-0.5810 range for the time being, note FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “Our expectations for the ‘sharp drop in NZD to extend’ were incorrect as it soared to a high of 0.5730. The rapid advance appears to be running ahead of itself and while there is room for NZD to test 0.5750, a sustained rise above this level is unlikely. The major resistance at 0.5810 is not expected to come into the picture. On the downside, a breach of 0.5670 (minor support is at 0.5695) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “Following the sharp decline in NZD to 0.5592 last Friday, we highlighted in our update yesterday (03 Oct, spot at 0.5620) that ‘downward momentum has not improved by much and NZD has to break clearly below 0.5565 before further sustained decline is likely’. That said, we did not expect the robust rebound that sent NZD to a high of 0.5730. The breach of our ‘strong resistance’ level at 0.5715 indicates that the 3-week weakness in NZD has stabilized. We view the current price movements as the early stages of a consolidation phase and we expect NZD to trade between 0.5610 and 0.5810 for now.”