The advance is likely limited to a test of 0.6260 – UOB Group

Additional New Zealand dollar (NZD) strength is not ruled out; Severely overbought conditions suggest any advance is likely limited to a test of 0.6260, note UOB Group FX strategists Quek Ser Leang and Lee Sue Ann.

NZD may try to test 0.626

24 HOUR VIEW: “Our view of sideways trading last Friday was incorrect as NZD climbed to a high of 0.6236, closing on a strong note at 0.6233 (+1.51%). While a further advance is not out of the question, severely overbought conditions suggest that any advance is likely limited to a test of 0.6260. Major resistance at 0.6320 is not expected to be threatened. Support levels are 0.6205 and 0.6180.”

WEEKS 1-3: “We highlighted last Thursday (August 22 at 0.6160) that the ‘overbought advance does not appear to be losing momentum yet.’ We considered that the NZD could reach the June 2023 high of 0.6223”. Last Friday, NZD broke above 0.6223, up 1.51% (NY close of 0.6233). From here, we continue to expect the NZD to advance. The next significant resistance is at the all-time high of 0.6320. As conditions are severely overbought, it remains to be seen whether this level is within reach. To sustain the overbought momentum, the NZD must not fall below 0.6140 (the previous ‘strong support’ level at 0.6090).”