NZD/USD: Momentum remains strong and targets 0.7245 – UOB

According to FX Strategists at UOB Group, NZD/USD could climb to the 0.7245 level in the near term.

Key Quotes

24-hour view: “Yesterday, we held the view that ‘the rapid rise in NZD could test 0.7180 first before easing’. We did not anticipate the strong surge that easily blew past 0.7180 as NZD soared to 0.7208. Robust momentum indicates that further NZD strength would not be surprising but overbought conditions suggest 0.7245 could be out of reach for today (there is another resistance at 0.7220). Support is at 0.7185 followed by 0.7160.”

Next 1-3 weeks: “We highlighted yesterday (20 Oct, spot at 0.7155) that conditions remain overbought but strong momentum suggests there is room for NZD to test the next major resistance at 0.7200. However, we did not anticipate the rapid manner by which NZD moved above 0.7200 (NZD rose to 0.7208 during NY session). Conditions remain overbought but strong momentum indicates that NZD could strengthen further to 0.7245. That said, it is left to be seen if NZD could maintain the current pace of advance. Overall, the NZD strength that started late last week is deemed intact as long as the ‘strong support’ at 0.7125 (level was at 0.7080 yesterday) is not breached.”