NZD/USD is now seen navigating within the 0.5570-0.5755 range in the next few weeks, comment UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia.

Key Quotes

24-hour view: “Our view of NZD to ‘weaken further’ was incorrect as it soared to a high of 0.5649. The rapid advance is likely to extend but in view of the overbought conditions, a sustained rise above 0.5725 is unlikely. On the downside, a break of 0.5620 (minor support is at 0.5650) would indicate that the current upward pressure has eased.”

Next 1-3 weeks: “We expected NZD to weaken since late last week. In our latest narrative from yesterday (17 Oct, spot at 0.5575), we noted that while NZD is still weak, it has to break below 0.5510 further weakness is likely. NZD subsequently rebounded strongly to 0.5649 before extending its gain in early Asian trade. The breach of our ‘strong resistance’ level at 0.5560 indicates that the weakness in NZD has ended. NZD appears to have moved into a consolidation phase and is likely to trade between 0.5570 and 0.5755 for the time being.”