The prospects for NZD/USD to reach the 0.6150 region has diminished in favour of extra consolidation, suggested FX Strategists at UOB Group.
24-hour view: “We expected NZD to ‘consolidate and trade between 0.5910 and 0.6010’ yesterday. Against our expectation, NZD dropped to 0.5880 before staging a sudden and sharp bounce to an overnight high of 0.5979. The choppy price action has resulted in a mixed outlook. For today, NZD could continue to trade in a choppy manner between 0.5890 and 0.5990.”
Next 1-3 weeks: “NZD touched our ‘strong support’ level of 0.5880 yesterday before rebounding quickly. Upward momentum has deteriorated and the prospect for NZD to extend its gains to 0.6150 has diminished further. From here, unless NZD can move and stay above 0.5990 within these 1 to 2 days, a breach of 0.5880 would not be surprising and would indicate the recent upward pressure has dissipated. To look at it another way, it appears likely that NZD is ready to move into a consolidation phase (and trade sideways for a period).”