NZD/USD risks extra losses below 0.6960 – UOB

Prospects for further decline in NZD/USD are expected to gain traction on a breach of 0.6960, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the decline is deeply oversold and NZD is unlikely to weaken much further’ and we expected NZD to ‘trade between 0.6975 and 0.7020’. However, NZD dipped to 0.6965 before recovering. While downward momentum has barely improved, there is room for NZD to test 0.6960 first before a more robust recovery can be expected. The next support at 0.6940 is unlikely to come into the picture. Resistance is at 0.7005 followed by 0.7025.”

Next 1-3 weeks: “We have expected NZD to ‘trade between 0.6960 and 0.7105’ since last Thursday (24 Jun, spot at 0.7045). Yesterday (30 Jun, spot at 0.6995), we highlighted that ‘downward momentum is beginning to improve but NZD has to close below 0.6960 before a sustained decline can be expected’. There is no change in our view as NZD dropped to an overnight low of 0.6965. All in, the risk of a sustained decline is intact as long as NZD does not move above 0.7040 (‘strong resistance’ level was at 0.7055 yesterday). Looking ahead, the next support below 0.6960 is at 0.6940 followed by 0.6920.”