NZD/USD: Outlook remains positive – UOB

The outlook for NZD/USD stays constructive but sustained gains above 0.7250 are not favoured, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘the rapid pull-back from the high has room to extend lower but any weakness is likely limited to a test of 0.7160’. NZD subsequently rose to a high of 0.7229 before dropping sharply to an overnight low of 0.7153. From here, the risk remains on the downside but the support at 0.7130 is unlikely to come under threat. Resistance is at 0.7200 followed by 0.7225.”

Next 1-3 weeks: “NZD rose to within 10 pips of the major resistance of 0.7250 last Thursday (high of 0.7241) before retreating quickly. The rapid pull-back amid lackluster upward momentum suggests that NZD is unlikely able to maintain a foothold above 0.7250. Overall, while the outlook for NZD is viewed as positive, the prospect for a sustained advance above 0.7250 is not high. On the downside, a break of 0.7100 would indicate that a short-term top is in place.”