UOB Group’s FX Strategists noted NZD/USD could recede to the 0.7125 level on a break below 0.7160 in the short-term.
24-hour view: “While we expected NZD to weaken yesterday, we were of the view that ‘a clear break of 0.7180 is unlikely’. However, the weakness in NZD exceeded our expectation as it dropped to 0.7167. Downward momentum has improved and NZD could dip below the major support at 0.7160 but the next support at 0.7140 is likely out of reach. Resistance is at 0.7185 followed by 0.7205.”
Next 1-3 weeks: “We highlighted yesterday that the outlook is mixed and NZD ‘has to break out of the expected sideway-trading range of 0.7160/0.7260 before a clearer picture will emerge’. NZD is currently holding just above 0.7160 and a daily closing below this level would indicate that NZD could weaken to 0.7125. The odds for such a move are quite high and would remain intact as long as NZD does not move above 0.7225 within these few days.”
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