Robust momentum indicates New Zealand Dollar (NZD) could break above 0.5700, but it might not be able to maintain a foothold above this level. In the longer run, NZD is likely to continue to rise, potentially reaching the major resistance at 0.5750, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD is likely to continue to rise

24-HOUR VIEW: “The sharp surge in NZD that sent it to a high of 0.5682 was surprising (we were expecting sideways trading). While the advance is overbought, robust momentum indicates NZD could break above 0.5700. Given the overbought conditions, it might not be able to maintain a foothold above this level. The next major resistance at 0.5750 is also unlikely to come into view for now. Support is at 0.5620; a breach of 0.5630 would indicate that the current strong upward pressure has eased.”

1-3 WEEKS VIEW: “We indicated yesterday (20 Jan, spot at 0.5585) that the recent ‘upward momentum has largely faded, and from here, we expect NZD to trade in a 0.5540/0.5650 range.’ We did not anticipate the resurgence in momentum, as NZD soared above 0.5650, reaching a high of 0.5682. NZD is likely to continue to rise, potentially reaching the major resistance at 0.5750. We will maintain our positive NZD view as long as 0.5600 is not breached.”