NZD/USD could extend the upside to 0.6940 – UOB

NZD/USD is likely to re-visit the 0.6940 level in the next weeks, in opinion of FX Strategists at UON Group.

Key Quotes

24-hour view: “We expected NZD to ‘grind higher towards the top of the expected 0.0.6800/0.6855 range first’ yesterday. However, it blew past 0.6855 and surged to a high of 0.6904 before easing to end the day on a strong note at 0.6883 (+0.75%). While the rapid rise appears to be overdone, strong upward momentum suggests further NZD strength. However, the major resistance at 0.6940 is unlikely to come into the picture (0.6920 is already a strong level). On the downside, a break of 0.6845 (minor support is at 0.6865) would indicate the current upward pressure has eased.”

Next 1-3 weeks: “Last Friday (06 Nov, spot at 0.6765), we highlighted that ‘risk of a break of 0.6800 has increased’ and that ‘if NZD can close above this level, it could advance further to 0.6830, possibly 0.6880’. When NZD closed above 0.6800, we indicated on Tuesday (11 Nov, spot at 0.6825), that ‘next level to focus on is at 0.6880 but overbought shorter-term conditions could lead to a few days of consolidation first’. NZD blew past 0.6880 yesterday (11 Nov) and surged to a high of 0.6904. While overbought, the rally is accompanied by strong momentum and NZD could strengthen further to the next major resistance at 0.6940. All in, only a break of 0.6800 (‘strong support’ level previously at 0.6740) would indicate that the current rally has run its course.”