NZD/USD: Rising odds for a move below 0.6085 – UOB

In the view of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, NZD/USD risks a drop below 0.6085 in the short-term horizon.

Key Quotes

24-hour view: “We expected NZD to edge lower yesterday but we were of the view that ‘any decline is likely part of a lower range of 0.6115/0.6165’. We added, ‘a sustained decline below 0.6115 is unlikely’. Our view was not wrong as NZD edged to a low of 0.6112 before closing at 0.6115 (-0.38%). Downward momentum has waned and this coupled with oversold conditions suggests NZD is likely to weaken much further. Today, NZD is more likely to trade in a range between 0.6105 and 0.6145.”

Next 1-3 weeks: “We have held a slightly negative NZD view since early last week. In our latest narrative from three days ago (24 Apr, spot at 0.6140), we indicated that ‘While downward momentum has not increased much, NZD is likely to trade with a downward bias’. We added, ‘It remains to be seen if there is enough momentum for NZD to drop to the major support at 0.6085’. NZD dropped to a low of 0.6112 yesterday and downward momentum has increased, albeit not much. The likelihood of NZD breaking below 0.6085 has increased but it has to remain below this level before further decline to 0.6035 is likely. On the upside, a break of 0.6175 (‘strong support’ level was at 0.6200 yesterday) would indicate the current downward bias in NZD has eased.”