NZD/USD: Has a chance to drop towards 0.5900 – UOB Group

The New Zealand Dollar (NZD) could drop to 0.5900 before the risk of a more sustained recovery increases. In the longer run, NZD could drop to 0.5875 before a rebound is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD can drop to 0.5875 before a rebound is likely

24-HOUR VIEW: “We indicated yesterday that ‘there is room for NZD to break the major support at 0.5940, but a clear break below this level is unlikely.’ NZD fell more than expected to 0.5912, recovering slightly to close at 0.5939 (-1.14%). Although downward momentum seems to have slowed, NZD could drop to 0.5900 before the risk of a more sustained recovery increases. The next support at 0.5875 is unlikely to be tested. Resistance level is at 0.5975, followed by 0.5995.”

1-3 WEEKS VIEW: “We revised our NZD outlook from negative to neutral two days ago (04 Nov, spot at 0.5985), indicating that ‘the weakness in NZD from early last month has ended.’ We also indicated that NZD ‘has likely entered a range trading phase and is expected to trade between 0.5940 and 0.6040 for now.’ Yesterday, NZD broke clearly below 0.5940, reaching a fresh three-month low of 0.5912. Although the increase in momentum indicates further NZD weakness, conditions remain oversold due to the recent month-long decline. In other words, the potential of any weakness may be limited. Overall, as long as 0.6015 is not breached, NZD could drop to 0.5875 before a rebound is likely.”