Likely to trade in a range between 0.5720 and 0.5805 – UOB Group

New Zealand Dollar (NZD) could rise further; overbought conditions could limit any gains to a test of 0.5785. In the longer run, for the time being, NZD is likely to trade in a range between 0.5720 and 0.5805, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Overbought conditions might limit any gains to a test of 0.5785

24-HOUR VIEW: “NZD fell more than we expected last Friday. Yesterday, when NZD was at 0.5730, we pointed out that ‘the combination of slowing downward momentum and oversold conditions suggests that NZD is likely to consolidate today, probably between 0.5715 and 0.5750’. However, instead of consolidating, NZD rose to a high of 0.5775. The advance has gathered momentum, and NZD could rise further today. That said, overbought conditions could limit any gains to a test of 0.5785. The major resistance at 0.5805 is not expected to come into view. Support is at 0.5775; a breach of 0.5740 would indicate that the current upward pressure has eased.”

1-3 WEEKS VIEW: “Last Friday (09 Jan, spot at 0.5750), we highlighted that ‘downward momentum has increased slightly, and NZD could edge lower toward 0.5715’. After NZD subsequently fell to a low of 0.5712, we highlighted yesterday (12 Jan, spot at 0.5730) that ‘while downward momentum remains mild, NZD could continue to edge lower toward 0.5690’. We did not anticipate NZD to recover and break above our ‘strong resistance’ level at 0.5770 (high of 0.5775). The mild downward pressure has eased, and for the time being, we expect NZD to trade in a range, most likely between 0.5720 and 0.5805.”