NZD/USD faces solid support around 0.6635 – UOB

NZD/USD remains poised for further decline, although a move to 0.6635 appears unlikely for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘a break of 0.6700 would not be surprising but NZD may not be able to maintain a foothold below this level’. NZD subsequently cracked 0.6700, plummeted to 0.6661 before rebounding. The rebound amid deeply oversold conditions suggest that NZD is unlikely to weaken further. For today, NZD is more likely to consolidate and trade within a range of 0.6665/0.6720.”

Next 1-3 weeks: “Last Friday (21 Jan, spot at 0.6740), we highlighted that NZD is likely to trade with a downward bias. Yesterday (24 Jan), we highlighted that a break of 0.6700 would shift the focus to the next support at 0.6670. While our view was not wrong, we did not expect the sharp drop to 0.6661 during NY session. Risk remains on the downside but deeply oversold conditions suggest that the next support at 0.6635 may not come into the picture so soon. On the upside, a breach of 0.6750 (‘strong resistance’ level was at 0.6780 yesterday) would indicate that the downside risk has dissipated.”