May try to breach 0.6290 – UOB Group

Instead of continuing higher, the New Zealand dollar (NZD) is likely to trade in a range of 0.6230/0.6290. In the longer term, the NZD is expected to continue to advance; Whether the Ytd high of 0.6320 is within reach remains to be seen, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

Bulls are pushing towards 0.6290

24 HOUR OUTLOOK: “After our expectations for NZD to test 0.6265 two days ago failed to materialise, we highlighted yesterday that ‘the underlying tone still looks firm and we continue to see a chance for NZD to test 0 ,6265”. However, we considered that “sustained growth above this level appears unlikely.” NZD rose more than expected as it rose to 0.6298 before pulling back sharply to close at 0.6257 (+0.18%). The pullback in overbought conditions suggests that rather than continuing higher, the NZD is likely to trade in a 0.6230/0.6290 range.”

WEEKS 1-3: “Our most recent narrative was from Monday (August 26 at 0.6230) where “while we continue to expect the NZD to advance, conditions are severely overbought and it remains to be seen whether next year – date high of 0.6320 is within reach.” Yesterday, although the NZD rose to 0.6298, there is no clear momentum building. In other words, it remains to be seen whether the annual high of 0.6320 is within reach. On the downside, a breach of 0.6200 (the previous ‘strong support’ level at 0.6180) would indicate that the NZD is not strengthening further.”