In opinion of FX Strategists at UOB Group, extra upside in NZD/USD is likely once 0.7070 is cleared.
Key Quotes
24-hour view: “Yesterday, we held the view that “there is room for NZD to test 0.7045 first before easing”. Our expectations did not materialize as NZD traded quietly within a 0.7009/0.7035 range before rising above 0.7045 during early Asian hours. Upward momentum has improved and NZD is likely to advance further but a sustained rise above the major resistance at 0.7570 is unlikely (next resistance is at 0.7095). Support is at 0.7030 followed by 0.7010.”
Next 1-3 weeks: “We highlighted yesterday (05 Jul, spot at 0.7020) that “the downside risk has dissipated” and we were of the view that NZD “could trade between 0.6960 and 0.7070”. There is no change in our view even though shorter-term upward momentum is beginning to improve. That said, NZD has to close above 0.7070 before a move to 0.7095 can be expected. At this stage, the chance for NZD to close above 0.7070 is not high but it would remain intact as long as NZD does not move below the ‘strong support’ at 0.6990 within these few days.”