NZD/USD faces a tough barrier around 0.6230 – UOB

NZD/USD should clear the 0.6230 region to allow for the continuation of the uptrend, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We held the view yesterday that NZD ‘is still in a consolidation phase’ and expected it to ‘trade between 0.6150 and 0.6220’. NZD subsequently traded within a narrow than expected range of 0.6171/0.6228. While the price action still seems to be part of an on-going consolidation phase, the underlying tone has weakened somewhat and this could lead to a drift lower towards 0.6150. On the upside, 0.6230 is acting as a solid resistance.”

Next 1-3 weeks: “After the strong surge in NZD earlier this week, we highlighted on Wednesday (27 May, spot at 0.6195) that while there is no sign of a top just yet, NZD has to move clearly above 0.6230 before further sustained advance can be expected. NZD subsequently touched 0.6232 and yesterday (28 May), it retreated from 0.6228. Upward momentum is showing sign of tiring and unless we see a clear break of 0.6230 within these 1 to 2 days, a breach of the ‘strong support’ at 0.6125 (level previously at 0.6110) would indicate that the positive phase that started earlier last week (see annotations in the chart below) has run its course.”