NZD/USD: Scope to test 0.6025 – UOB Group
Rebound in New Zealand Dollar (NZD) has scope to test 0.6025 against US Dollar (USD), but a sustained break above this level is unlikely. In the longer run, NZD must break and hold below 0.5940 before further declines are likely, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Sustained break above 0.6025 is unlikely
24-HOUR VIEW: "Our view for NZD 'to trade in a sideways range of 0.6000/0.6045' yesterday was incorrect. Instead of trading sideways, USD fell to a low of 0.5959 and then rebounded to close at 0.5992 (-0.64%). The rebound appears to have scope to test 0.6025, but based on the current momentum, a sustained break above this level is unlikely. The major resistance at 0.6055 is not expected to come into view. Support is at 0.5975; a breach of 0.5960 would mean that NZD is not rebounding further."
1-3 WEEKS VIEW: "On Tuesday (17 Jun, spot at 0.6055), we noted 'an increase in upward momentum', but we pointed out that 'it is not sufficient to indicate the start of a sustained advance.' We indicated that NZD 'must first close above 0.6095 before a move to 0.6135 can be expected.' After NZD fell below our ‘strong support’ level of 0.6005, we indicated yesterday (19 Jun, spot at 0.6025) that NZD 'is expected to trade in a range between 0.5980 and 0.6080.' We did not expect NZD to drop below 0.5980, reaching a low of 0.5959. This time around, the increase in downward momentum is not enough to suggest a sustained drop. NZD must break and hold below 0.5940 before further declines are likely. The probability of NZD breaking clearly below 0.5940 does not seem high for now, but this risk remains intact provided that 0.6055 is not breached."
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FXStreet Insights Team
FXStreet
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