NZD/USD remains strong, could test 0.6850 – UOB

The outlook on the pair remains neutral in the near term, although a test of 0.6850 appears unlikely, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Strong NZ jobs data sent NZD/USD flying past the major 0.6700 resistance to hit a high of 0.6742. While the rally in NZD could extend further, the up-move is running too fast, too soon and a break above the next resistance at 0.6780 seems unlikely for now. Support is at 0.6720 followed by 0.6700. The latter level is likely strong enough to hold any intraday pullback”.

Next 1-3 weeks: “We have held the same view since last Friday (02 Nov, spot at 0.6645) wherein there is “scope for NZD to test the September’s peak of 0.6700”. However, instead of ‘testing’ this major resistance, the better than expected NZ jobs data sent NZD rocketing to an overnight high of 0.6742. Despite the strong up-move, we still think that it is too soon to expect the start of a bullish reversal. Only a clear break above 0.6850 would indicate that NZD has made a mid to long-term bottom. Meanwhile, further NZD strength is not ruled out but 0.6850 is likely out of reach, at least for the next 1 to 2 weeks (0.6780 is already a strong level). On the downside, the ‘key support’ is currently at 0.6640, up from 0.6565 previously”.