New Zealand Dollar (NZD) could rise further, but it may not be able to break clearly above 0.6000. In the longer run, momentum continues to suggest a higher NZD; it must first close above 0.6000 before further advances are likely, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Momentum continues to suggest a higher NZD

24-HOUR VIEW: "We noted 'a firmer underlying tone' yesterday, and we expected NZD to 'trade in a higher range of 0.5930/0.5970.' However, NZD rose sharply and reached a high of 0.5997. Today, NZD could rise further, but overbought conditions suggest that it may not be able to break clearly above 0.6000. On the downside, if NZD breaks below 0.5950, with minor support at 0.5965, it would mean that is likely to range trade instead of heading higher toward 0.6000."

1-3 WEEKS VIEW: "We have maintained the same view since last Friday (08 Aug, spot at 0.5960), in which we stated that 'upward momentum is building, but not significantly.' We expected NZD to 'edge higher,' but we pointed out that 'it is currently unclear if it can reach 0.6000.' Yesterday, in a sudden move, NZD rose sharply to a high of 0.5997. While increasing upward momentum continues to suggest a higher NZD, it must first close above 0.6000 before further advances are likely. The likelihood of NZD closing above 0.6000 will remain in place, provided that the ‘strong support’ at 0.5930 (level previously at 0.5910 yesterday) is not breached. Looking ahead, the next level to watch above 0.6000 is 0.6020."