Expected to trade sideways between 0.6310 and 0.6365 – UOB Group

Momentum is turning neutral; the New Zealand Dollar (NZD) is expected to trade sideways between 0.6310 and 0.6365. In the longer run, there has been no further increase in momentum; it remains unclear if NZD could rise further to 0.6410, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

Unclear if NZD can rise further to 0.6410

24-HOUR VIEW: “After NZD rose sharply last Friday, we indicated yesterday (Monday) that ‘the rapid rise seems to be overdone, but NZD could test the resistance at 0.6370 before the risk of a pullback increases.’ We also indicated that ‘a sustained break above 0.6370 is unlikely today.’ Our view was not wrong, even though NZD rose slightly more than expected to 0.6379 before pulling back. Momentum indicators are turning neutral, and we expect NZD to trade sideways today, probably between 0.6310 and 0.6365.”

1-3 WEEKS VIEW: “Last Friday (27 Sep, spot at 0.6325), we indicated that ‘to continue to advance, NZD must break clearly above 0.6355.’ After NZD broke above 0.6355, we indicated yesterday (30 Sep, spot at 0.6350) that NZD ‘is likely to rise above 0.6370, but it is unclear for now if there is sufficient momentum for it to reach last July’s high, near 0.6410.’ NZD subsequently rose, reaching 0.6379 before pulling back. There has been no further increase in momentum, and it remains unclear if NZD could rise further to 0.6410. Overall, only a breach of 0.6280 (no change in ‘strong support’ level) would mean that 0.6410 is not coming into view.”