NZD/USD: May test the support at 0.5830 before stabilization – UOB Group
New Zealand Dollar (NZD) may test the support at 0.5830 before stabilization can be expected; a clear break below this level is unlikely. In the longer run, NZD is likely to trade in a range of 0.5800/0.5900, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Clear break below 0.5830 is unlikely
24-HOUR VIEW: "Two days ago, we indicated that 'there is scope for NZD to continue to edge higher, but a break above 0.5920 seems unlikely.' After NZD subsequently rose to a high of 0.5914, we indicated yesterday that 'upward momentum is starting to slow, and rather than continuing to advance, NZD looks set to consolidate today, most likely in a range of 0.5890/0.5915.' Our view of consolidation was incorrect, as NZD plummeted to a low of 0.5839. While the decline is oversold, strong downward momentum suggests that NZD may test the support at 0.5830 before stabilization can be expected. Given the oversold conditions, a clear break below this level is unlikely. Resistance is at 0.5870, followed by 0.5885."
1-3 WEEKS VIEW: "Yesterday (02 September, spot at 0.5905), we turned cautiously positive on NZD, indicating that it 'must break and hold above 0.5920 before a move to 0.5940 can be expected.' We also indicated that “the odds of NZD closing above 0.5920 will remain intact, as long as 0.5870 (‘strong support’ level) is not breached.” We did not expect NZD to drop below our ‘strong support’ level, as it fell to a low of 0.5839. The buildup in momentum has fizzled out. From here, we are adopting a neutral stance and expect NZD to trade in a range of 0.5800/0.5900."
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FXStreet Insights Team
FXStreet
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