NZD/USD focus on 0.7435/40 – UOB

The upside momentum in the Kiwi Dollar has shifted its attention to the 0.7435/40 band, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “While the ‘pullback target’ of 0.7335 highlighted yesterday was met (low of 0.7334), the subsequent strong up-move from the low was unexpected. From there, a test of last week’s 0.7437 peak seems likely but this level is acting as a very strong resistance and is unlikely to yield so easily (next resistance is at 0.7470). Support is at 0.7370 followed by the low near 0.7335. The latter support level is expected to be ‘safe’ for today”.

Next 1-3 weeks: “We have held the same view since last Thursday (25 Jan, spot at 0.7345) that the recent peak near 0.7435/40 is acting as a very strong resistance and would be a difficult hurdle to overcome. Since then, NZD has held below this level but the relatively strong daily closing in NY yesterday has improved the chance for a move above this major resistance. From here, a clear break above 0.7435/50 would indicate that the next ‘up-leg’ within the current bullish phase has started (next ‘target’ would be at 0.7500). On the downside, the ‘stoploss’ level is raised higher to 0.7310 from 0.7280 previously. A break of the ‘stop-loss’ would indicate that the bullish phase that started on 14 Dec (spot at 0.7015) has ended”.