In opinion of FX Strategists at UOB Group, NZD/USD could have charted a near-term top following the recent price action.

Key Quotes

24-hour view: “While we expected NZD to advance yesterday, we were of the view that ‘a sustained rise above 0.6775 is unlikely’. We did not anticipate the strong surge in NZD to 0.6809 and the subsequent sharp pullback from the high. The pullback amid deeply overbought conditions could extend to 0.6735. The strong support at 0.6715 is unlikely to come under threat. Resistance is at 0.6785 followed by 0.6800.”

Next 1-3 weeks: “We have expected a stronger NZD since last Thursday (17 Feb, spot at 0.6690). In our latest narrative from yesterday (23 Feb, spot at 0.6750), we highlighted that NZD could advance further to 0.6775, possibly 0.6795. While our view for a stronger NZD was not wrong, we did not expect the manner by which NZD surged to 0.6809 and the subsequent sharp pullback. The pullback amid overbought conditions has increased the risk of a short-term top. From here, a breach of 0.6715 (‘strong support’ level was at 0.6700 yesterday) would indicate that 0.6809 is likely a short-term top.”