Surge in momentum is likely to lead to further New Zealand Dollar (NZD) strength to 0.6380; 0.6410 is unlikely to come under threat. NZD is expected to continue to head higher, potentially to 0.6410, UOB Group FX strategists Quek Ser Leang and Peter Chia note.
NZD to head higher, potentially to 0.6410
24-HOUR VIEW: “After NZD rose sharply two days ago, we indicated yesterday that “the increase in momentum suggests further NZD strength towards 0.6290.” We added, “the major resistance at 0.6310 is unlikely to come into view.” NZD rose more than expected, soaring to a high of 0.6343 in late NY trade before continuing to rise in Asian trade today. The surge in momentum is likely to lead to further advance in NZD even though the major resistance at 0.6410 is unlikely to come under threat. The minor resistance at 0.6380 appears to be within reach. Support is at 0.6330, a breach of 0.6310 would suggest that NZD is not advancing further.”
1-3 WEEKS VIEW: “Yesterday (24 Sep, spot at 0.6265), we turned positive in NZD, indicating that it “could head higher to 0.6310, but at this time, the probability of it breaking clearly above this level is not high.” We added, “only a breach of 0.6215 (‘strong support’ level) would mean that the current buildup in upward momentum has eased.” Our view of a higher NZD was not wrong, but we did not anticipate the rapid manner in which it broke above 0.6310 and soared to 0.6343. We continue to expect a higher NZD, aiming for an advance to 0.6410. On the downside, the ‘strong support’ level has moved higher 0.6270.”
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