The weakness around the Kiwi Dollar could push spot to drop as low as the 0.6540 area in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “The outsized plunge in NZD yesterday is clearly over-extended and while further decline is still likely, any down-move is expected to be at a slower pace and 0.6570 could temporarily check the current weakness (minor support is at 0.6600). On the upside, we expect 0.6660 to be strong enough to cap any intraday bounce”.
Next 1-3 weeks: “While we have been anticipating “a fresh year-to-date low” since last Friday (03 Aug, spot at 0.6740), the outsized decline of more than 2% upon the break of the previous year-to-date low at 0.6688 came as a surprise (move came after RBNZ’s dovish statement yesterday). The ‘negative’ outlook has shifted to ‘bearish’ and from here; we see room for further NZD weakness to 0.6540. That said, it is unlikely that NZD can maintain the current pace of decline. On the upside, ‘stop-loss’ level is at 0.6700”.
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