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Strong momentum suggests further New Zealand Dollar (NZD) strength, even though it is unlikely to be able to reach the significant resistance at 0.6120, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Closest support is at 0.6005
24-HOUR VIEW: “Although we expected NZD to rise above 0.6035 yesterday, we indicated that ‘it might not be able to maintain a foothold above this level.’ We also indicated that ‘the major resistance at 0.6055 is unlikely to come into view.’ The anticipated NZD strength exceeded our expectations, as it broke above both 0.6035 and 0.6055, soaring to a high of 0.6082. NZD closed on a strong note at 0.6077 (+0.98%). While overbought, strong momentum suggests further NZD strength, even though it is unlikely to be able to reach the significant resistance at 0.6120 (there is another resistance at 0.6100). To keep the momentum going, NZD must not break below 0.6025 (minor support is at 0.6055).”
1-3 WEEKS VIEW: “We turned positive in NZD early this month. As we tracked the advance, in our most recent narrative from two days ago (12 Aug, spot at 0.6000), we highlighted that ‘while NZD could continue to rise, it must break clearly above 0.6035 before an advance to 0.6055 can be expected.’ After trading in a relatively quiet manner for a couple of days, NZD took off yesterday and soared to a high of 0.6082. The price action continues to suggest NZD strength, even though we acknowledge a significant resistance at 0.6120. We will continue to hold a positive NZD view provided that the ‘strong support’ at 0.6005 (level previously at 0.5960) is not breached.”