NZD/USD a drop below 0.7240 seems unlikely – UOB

In opinion of FX Strategists at UOB Group, a decline to the 0.7240 region appears unlikely in the near term.

Key Quotes

“Expectation for a temporary top yesterday was wrong as NZD spiked to touch a high of 0.7344. The subsequent swift decline from the high suggests that NZD has likely made a short-term top at 0.7344. The down-move appears to have scope to extend lower but at this stage, a move below 0.7240 seems unlikely (0.7260 is already a strong support). Resistance is at 0.7295 followed by 0.7310. The 0.7344 high is not expected to come into the picture for today”.

“NZD spiked to a high of 0.7344 yesterday, holding just a few pips below the top of our expected 0.7230/0.7350 consolidation range. The rapid and sharp drop from the high and the subsequent daily close near the low has resulted in an ‘ugly’ outlook for NZD. That said, it is too early to expect a sustained down-move and only a clear break below 0.7230 would indicate that a deeper pullback has started. In the meanwhile, we continue to expect this pair to trade within a 0.7230/0.7350 range”.