The kiwi chart

Analysts say room for additional upside action in the kiwi/dollar is possible in early 2007, but then traders should be on guard for a reversal.

“We are modestly bullish on the New Zealand dollar in early 2007 due to its ongoing yield appeal and the danger of another RBNZ hike,” Callow says. “Obviously, it is very expensive to be short the New Zealand dollar. But as the world economy cools and the high New Zealand dollar continues to hurt New Zealand exporters, the kiwi should finally start to soften.”

He sees a short-term push above the 0.7000 level, but an eventual retreat back below 0.6700 by early summer.

Moody’s Economy.com’s Levine held a negative view. He sees the potential for the kiwi to fall below the 0.6000 level by the third quarter.

“We are bearish on the kiwi dollar and anticipate a steady decline in 2007, as the RBNZ is given scope to cut rates earlier than expected,” he says.