NZD/USD: Door open to a potential drop to 0.5750 – UOB

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, NZD/USD could slip back to the 0.5750 region ahead of 0.5720 in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that ‘there is room for NZD to drop to 0.5870’. We added, ‘The next support at 0.5840 is unlikely to come into view’. While NZD dropped to a low of 0.5844 in NY, it cracked 0.5840 during early Asian hours. Obviously, NZD is still under pressure and we see chance for NZD to weaken to 0.5780, possibly 0.5750. On the upside, a breach of 0.5870 (minor resistance is at 0.5850) would indicate that the current downward pressure has eased.”

Next 1-3 weeks: “We turned negative on NZD one week ago (14 Sep, spot at 0.6005). As NZD declined, in our latest narrative from yesterday (21 Sep, spot at 0.5900), we indicated that further NZD weakness is likely. We highlighted, the next levels to watch are at 0.5870 and 0.5840. While our view of a weak NZD is correct, we did not expect the rapid pace of decline as NZD plunged to 0.5844 before extending its decline today. We continue to expect NZD to weaken, likely to 0.5750, possibly 0.5720. Resistance wise, a breach of 0.5900 (‘strong resistance’ level was at 0.5980 yesterday) would indicate that NZD is unlikely to weaken further.”