Chance for the New Zealand Dollar (NZD) to retest the 0.6130 level, and a sustained break above this level appears unlikely. But, recovery in NZD could extend to 0.6150, UOB Group analysts Quek Ser Leang and Peter Chia note.
Recovery in NZD may extend to 0.6150
24-HOUR VIEW: “Two days ago, NZD dipped to a one-month low of 0.6048 and then rebounded. Yesterday, when NZD was trading at 0.6080, we indicated that ‘not only has downward momentum faded, but upward momentum has also increased to some extent.’ We expected NZD to trade with an upward bias, but we highlighted that ‘it remains to be seen if it can breach the strong resistance level at 0.6105.’ In NY trade, NZD took off and surged to a high of 0.6129. NZD pulled back from the high, closing at 0.6103 (0.41%). Despite the pullback, there is a chance for NZD to retest the 0.6130 level, even though a sustained break above this level appears unlikely. On the downside, support levels are at 0.6095 and 0.6080.”
1-3 WEEKS VIEW: “We have expected NZD to weaken since the middle of last month. Yesterday (03 Jul, spot at 0.6080), we indicated that ‘downward momentum has slowed further, and if NZD breaches 0.6105, it would mean that the weakness in NZD has stabilised.’ NZD subsequently broke above 0.6105 and rose to 0.6129. Not only has the weakness stabilised, but upward momentum is also beginning to build, and NZD could recover further 0.6150. The recovery is intact as long as the ‘strong support’ level, currently at 0.6070, is not breached.”