NZD/USD: Likely to trade in a range between 0.5610 and 0.5645 – UOB Group
New Zealand Dollar (NZD) is likely to trade in a range between 0.5610 and 0.5645. In the longer run, positive divergence suggests waning downside momentum; a breach of 0.5660 would mean that weakness in NZD has stabilized, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Positive divergence suggests waning downside momentum
24-HOUR VIEW: "While we expected NZD to 'edge lower' last Friday, we stated that 'any decline is likely part of a lower range of 0.5620/0.5650'. We added, 'we do not expect the major support at 0.5600 to come into play'. Our view of a lower NZD was not wrong, even though it fell more than expected to a low of 0.5607. NZD rebounded from the low and closed slightly lower by 0.13% at 0.5627. The rebound amid slowing momentum and oversold conditions suggests that instead of declining today, NZD is more likely to trade in a range, probably between 0.5610 and 0.5645."
1-3 WEEKS VIEW: "We have held a negative NZD stance since late last month. In our most recent narrative from last Wednesday (05 Nov, spot at 0.5645), we highlighted that 'downward pressure has increased, and NZD could weaken to 0.5600 next'. Last Friday, NZD edged to a low of 0.5607 before rebounding. The new low was accompanied by a positive divergence on momentum indicators, suggesting waning downside momentum. Unless NZD can break below 0.5600 within these one to two days, a breach of the ‘strong resistance’ at 0.5660 (level was previously at 0.5680) would mean that the weakness in NZD has stabilised."
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FXStreet Insights Team
FXStreet
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