NZD/USD still looks to the 0.5920 area – UOB

NZD/USD’s outlook remains on the bearish side, while a visit to 0.5920 should not be ruled out in the near-term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted the oversold conditions yesterday but held the view that ‘there is room for another leg lower to 0.5960 first’. Our view was not wrong as NZD dropped to 0.5958 before rebounding quickly to end the day little changed at 0.5997 (+0.03%). Conditions remain oversold and this coupled with the bounce from the low indicates that an interim bottom could be in place. From here, the rebound could extend higher but an advance beyond 0.6050 appears unlikely. Support is at 0.5985 ahead of 0.5960 which is acting as a solid level now.”

Next 1-3 weeks: “Yesterday, NZD dropped below the expected 0.6000/0.6130 consolidation range that we highlighted on Tuesday (12 May, spot at 0.6060). The rapid pick-up in momentum suggests further NZD weakness is likely towards 0.5920. At this stage, the prospect for a sustained decline below this strong support is not high. Overall, NZD is expected to trade on its back foot unless it can move back above 0.6085 (‘strong resistance’ level).”