In opinion of FX Strategists at UOB Group, NZD/USD faces a deeper retracement on a close below 0.6860 in the short-term horizon.
Key Quotes
24-hour view: “We expected NZD to weaken yesterday but we were of the view that it ‘is unlikely to threaten the next support at 0.6910’. The subsequent sharp sell-off to a low of 0.6877 came as a surprise. Downward momentum has eased somewhat as NZD rebounded from the low. For today, NZD is unlikely to weaken much further. NZD is more likely to trade between 0.6880 and 0.6935.”
Next 1-3 weeks: “Two days ago (05 Oct, spot at 0.6955), we highlighted that the recent weakness in NZD has come to an end and we expected NZD to consolidate within a 0.6880/0.7010 range. NZD dropped a few pips below the bottom of the expected range (low of 0.6877) yesterday before rebounding. While the underlying tone has weakened somewhat, NZD does not appear to be ready to head lower in a sustained manner just yet. Only a clear break of 0.6860 would indicate that NZD is ready to head lower. The chance for a clear break of 0.6860 is not high for now but would remain intact as long as NZD does not move above 0.6960 within these few days.”
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