NZD/USD: Likely to consolidate between 0.6050 and 0.6100 – UOB Group
The New Zealand Dollar (NZD) is likely to consolidate between 0.6050 and 0.6100. In the longer run, oversold weakness has not stabilised, but NZD must break clearly below 0.6050 before further sustained decline is likely, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
NZD must break below 0.6050 before a steady decline
24-HOUR VIEW: “Yesterday, we indicated that ‘tentative signs of slowing momentum combined with the still oversold conditions suggest NZD is likely to trade in a range.’ Our view of range trading was incorrect, as NZD plummeted to a low of 0.6053. The sharp and swift decline appears to be overdone. This, combined with tentative signs of slowing momentum, suggests NZD is unlikely to weaken much further. Today, NZD is more likely to consolidate between 0.6050 and 0.6100.”
1-3 WEEKS VIEW: “We turned negative in NZD last Wednesday (02 Oct, spot at 0.6285), indicating that ‘the pullback in NZD could potentially reach 0.6225.’ As NZD falls, we track the progress of the decline, and in our most recent narrative from Tuesday (08 Oct, spot at 0.6125), we indicated that NZD ‘still seems weak, but it remains to be seen if it has enough momentum to reach the next major support at 0.6075.’ Yesterday, NZD plummeted below 0.6075, reaching a low of 0.6053. While the weakness in NZD has not stabilised, conditions are severely oversold. To continue to decline in a sustained manner, NZD must break and remain below 0.6050. The probability of NZD breaking clearly below 0.6050 will remain intact as long as 0.6145 (‘strong resistance’ level previously at 0.6195) is not breached. Looking ahead, the next level to monitor below 0.6050 is 0.6005.”
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FXStreet Insights Team
FXStreet
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