NZD/USD: Door open to further retracement – UOB

NZD/USD is forecast to extend the current weakness into the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We did not anticipate the sharp sell-off that sent NZD plunging to 0.6856. The sharp and rapid decline appears to be overdone and NZD is unlikely to weaken much further. For today, NZD is more likely to trade between 0.6850 and 0.6925.”

Next 1-3 weeks: “While we highlighted yesterday (24 Nov, spot at 0.6940) that ‘the odds for NZD to drop below the next support at 0.6900 has increased’, we did expect the manner by which NZD sliced through 0.6900 and plunged to 0.6856. Further weakness is not ruled but oversold conditions suggest that the next major support at 0.6810 could be out of reach this time round (0.6850 is already quite a strong support level). Overall, the downside risk is deemed intact as long as NZD does not move above 0.6960 (‘strong resistance’ level was at 0.7005 yesterday).”