Prospects of further strength in NZD/USD appears to be losing some momentum.
24-hour view: “We expected NZD to ‘consolidate and trade between 0.6450 and 0.6550’ yesterday. However, it rose briefly to an overnight high of 0.6585 before easing off quickly. The underlying tone has weakened somewhat but it is too early to expect a sustained decline. For today, NZD is more likely to trade sideways, likely not moving out of yesterday’s broad range of 0.6497/0.6585.”
Next 1-3 weeks: “Yesterday, we indicated that ‘conditions remain overbought but the resilient rally in NZD appears not ready to call it a day just yet’. We added, ‘any further advance is expected to be at a slower pace’. NZD subsequently edged to a fresh high of 0.6580 before plummeting to a low of 0.6469. The low is not far above our ‘strong support’ level of 0.6450. While only a break of 0.6450 would indicate that the positive phase that started about 3 weeks ago has ended (see annotations in the chart below), the odds for further NZD have diminished. From here, unless NZD can move and stay above 0.6550 within these 1 to 2 days, a break of 0.6450 would not be surprising and would indicate that NZD has moved into a consolidation phase.”