NZD/USD remains offered, although 0.63 looks out of reach – UOB

The outlook on the Kiwi Dollar stays fragile but a test of the 0.6300 area vs. the Greenback appears unlikely for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “While our expectation for 0.6342 to be a “short-term bottom” was not wrong as NZD traded well above this level (low of 0.6358), the anticipated advance to 0.6415 did not materialize (high of 0.6395). The underlying tone has weakened slightly and this could lead to NZD drifting lower. That said, a sustained drop below the Monday’s (26 Aug) low of 0.6342 still appears unlikely. Resistance is at 0.6385 but only a move above 0.6400 would indicate the current mild downward pressure has eased”.

Next 1-3 weeks: “While NZD surrendered some of its Monday’s rebound and closed lower by -0.40% in NY (0.6362), downward momentum still appears to be lackluster. We highlighted the waning momentum since last Monday (19 Aug, spot at 0.6430) even though we were of the view that “there is still chance for NZD to weaken to 0.6350”. The strong rebound from Monday’s 0.6342 low reinforces our current view wherein while “NZD is still weak”, the next support at “0.6300 could be out of reach”. However, confirmation of a short-term bottom is only upon a move above 0.6415 (‘key resistance’ previously at 0.6430). Until then, NZD could ‘hang around’ these lower for a few more days”.