In opinion of FX Strategists at UOB Group, NZD/USD could edge lower and retest the 0.6800 neighbourhood in the short-term horizon.
Key Quotes
24-hour view: “We highlighted yesterday that ‘while NZD could drop below the overnight low of 0.6900, it is unlikely able to break the next support at 0.6870’. However, NZD dropped briefly to 0.6868, rebounded to 0.6951 before dropping back down to close at 0.6885 (-0.52%). While oversold, the weakness in NZD has not stabilized and it could edge lower to 0.6840. In view of the oversold conditions, a sustained decline below this level is unlikely (next support is at 0.6800). Resistance is at 0.6900 followed by 0.6920.”
Next 1-3 weeks: “Yesterday, we highlighted that ‘further weakness is not ruled out but NZD is unlikely able to maintain the pace of the current decline’. We added, ‘the next support below 0.6900 is at 0.6870 followed by 0.6840’. While our view for a weaker NZD was not wrong, we did not anticipate the price actions where NZD dropped briefly below 0.6870 (low of 0.6868), rebounded to 0.6951 before dropping back down. From here, there is no change to the weak outlook and a break of 0.6840 would shift the focus to 0.6800. On the upside, a breach of 0.6960 (‘strong resistance’ level was at 0.7000 yesterday) would indicate that the downward pressure has eased.”
