NZD/USD still looks offered in the near term – UOB

NZD/USD needs to clear the 0.7070 level to end the negative phase, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We noted yesterday that ‘the rapid drop appears to be overdone and NZD is unlikely to weaken much further’ and we expected NZD to ‘trade between 0.6930 and 0.6995’. NZD subsequently traded within a range of 0.6935/0.6999 before closing on a firm note at 0.6992 (+0.86%). The movement is viewed as part of an on-going consolidation phase but the firmed underlying tone suggests NZD is likely to trade within a higher range of 0.6945/0.7020.”

Next 1-3 weeks: “We noted yesterday (21 Jun, spot at 0.6955) that NZD ‘is still weak but the next support at 0.6870 may not come into the picture so soon’. There is no change in our view and only a break of 0.7050 (‘strong resistance’ level was at 0.7070 yesterday) would indicate that the downward pressure started early last week (see annotations in the chart below) has eased.”