According to FX Strategists at UOB Group, NZD/USD could still slip back to the 0.6870 region in the next weeks.
Key Quotes
24-hour view: “We expected NZD to ‘consolidate and trade between 0.6895 and 0.6950’ yesterday. NZD subsequently dipped to 0.6894 before rebounding strongly to 0.6977. The rebound appears to be overdone and NZD is unlikely to strengthen further. For today, NZD is more likely to trade between 0.6920 and 0.6980.”
Next 1-3 weeks: “Yesterday, we indicated that ‘oversold conditions could lead to a couple of days of consolidation first but NZD is likely to weaken to 0.6870, possibly 0.6845 later on’. We did not anticipate the sharp bounce that came close to our ‘strong resistance’ level at 0.6985 (high of 0.6977). The sharp rebound has resulted in a rapid loss in momentum but as long as 0.6985 is not breached, there is still a slim chance for NZD to move lower to 0.6870. In order to revive the flagging momentum, NZD has to move and stay below 0.6920 within these 1 to 2 days or a break of 0.6985 would not be surprising.”
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