24-hour view: While we expected NZD to rise further yesterday, we indicated that “in view of the overbought conditions, the chance of NZD breaking clearly above 0.5995 is not high.” NZD rose more than expected to 0.6004. However, it pulled back sharply from the high and closed at 0.5956 (-0.28%). Upward pressure has faded, and NZD is unlikely to rise further. Today, NZD is more likely to trade sideways between 0.5925 and 0.5985. 

Next 1-3 weeks: Our update from yesterday (30 Aug, spot at 0.5960) still stands. As highlighted, there is a tentative buildup in momentum. If NZD breaks and stays above 0.5995, it is likely to advance to 0.6035. Note that while NZD broke above 0.5995 in NY trade, it fell sharply from the high. Overall, only a breach of the 0.5900 (no change in ‘strong support’ level) would indicate that the upside risk has dissipated.