FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang suggest NZD/USD could attempt some consolidation in the very near term.
24-hour view: “We expected NZD to weaken further yesterday but we were of the view that ‘the next support at 0.5640 is unlikely to come into view for now’. Our view for NZD to weaken was not wrong even though NZD took out 0.5640 and dropped to 0.5627 before rebounding. The rebound amidst oversold conditions and slowing momentum suggests NZD is unlikely to weaken further. For today, NZD is more likely to trade between 0.5645 and 0.5730.”
Next 1-3 weeks: “We turned negative in NZD about 2 weeks ago. As NZD dropped in line with our expectations, in our latest narrative from yesterday (26 Sep, spot at 0.5730), we indicated that NZD is expected to continue to weaken, possibly to 0.5640. Our view was not wrong even though we did not expect NZD to breach 0.5640 so quickly (low of 0.5627 in NY). Further weakness is not ruled out but oversold short-term conditions could lead to a couple of days of consolidation first. As long as 0.5800 (‘strong resistance’ level was at 0.5815 yesterday) is not breached, NZD is likely to weaken further. That said, the chance of a clear break of 0.5600 is not high for now.”
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