In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, NZD/USD should now trade within the 0.5910-0.6040 range in the short-term horizon.

Key Quotes

24-hour view: We expected NZD to trade in a range of 0.5915/0.5965 yesterday. However, it rose to a high of 0.5984 before closing on a firm note at 0.5980 ( 0.55%). The rapid increase in momentum is likely to lead to further NZD strength to 0.6000. The major resistance at 0.6040 is not expected to come under threat today. Support is at 0.5950, followed by 0.5930. The latter level is solid support. 

Next 1-3 weeks: Yesterday (23 Aug, spot at 0.5945), we pointed out that “downward momentum has waned further, and the likelihood of further NZD weakness has diminished considerably.” We also pointed out that “only a break of 0.5985 would indicate that the weakness in NZD has stabilised.” In NY trade, NZD rose to a high of 0.5984. While our ‘strong resistance’ level at 0.5985 has not been clearly breached, downward momentum has more or less faded. NZD appears to have moved into a consolidation phase, and it is likely to trade in a range between 0.5910 and 0.6040 for the time being