NZD/USD: Downside momentum remains well in place – UOB

The bearish mood around NZD/USD looks unchanged for the time being, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘downward momentum is strong and NZD is likely to weaken further even though the major support at 0.6910 could be just out of reach’. Our view for a weaker NZD was correct but the subsequent weakness exceeded our expectations as NZD cracked 0.6910 and plunged to 0.6861. While the sharp and rapid drop is deeply oversold, there is room for a test of 0.6840 first before stabilization can be expected. On the upside, a break of 0.6915 would indicate that the current weakness has stabilized (minor resistance is at 0.6900).”

Next 1-3 weeks: “We noted yesterday (29 Sep, spot at 0.6950) that ‘rapid increase in downward momentum suggests further NZD weakness is likely’. We added, ‘the next support is at 0.6910 followed by 0.6880’. That said, we did not expect NZD to break both levels so quickly (overnight low of 0.6861). Downward momentum is strong but it remains to be seen if the weakness in NZD could reach the August’s low at 0.6807. The NZD weakness is intact as long as it does not break 0.6980 (‘strong resistance’ level was at 0.7025 yesterday).”