NZD/USD: Further gains likely above 0.6225 – UOB
05.12.2023, 07:48

NZD/USD: Further gains likely above 0.6225 – UOB

NZD/USD needs to clear 0.6225 to allow for extra advances in the near term, note UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: We highlighted yesterday that NZD “is likely to break above the major resistance at 0.6225.” We also highlighted that “in view of the overbought conditions, it remains to be seen if it can maintain a foothold above this level.” However, NZD did not break 0.6225, as it dropped sharply from 0.6222 to 0.6151. Today, NZD could continue to drop, but as downward momentum has not increased much, a clear break below 0.6140 is unlikely. The risk of NZD dropping to 0.6140 will remain intact as long as it stays below 0.6200 (minor resistance is at 0.6185). 

Next 1-3 weeks: After NZD soared last Friday, we indicated yesterday (04 Dec, spot at 0.6215) that “upward momentum has increased considerably, and NZD is very likely to break above 0.6225.” The sharp drop from 0.6222 to 0.6151 came as a surprise. While our ‘strong support’ at 0.6130 has not been breached, the sharp drop has diminished the odds of NZD breaking above 0.6225. In order to rejuvenate the flagging momentum, NZD must break above 0.6225 in the next 1-2 days, or a breach of 0.6130 would not be surprising. A breach of 0.6130 will indicate that NZD is likely to trade in a range for a period of time. 

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