NZD/USD is expected to slip back to the 0.5800 level if 0.5870 is cleared in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “We held the view yesterday that ‘further NZD weakness is not ruled out but any decline could be limited to a test of 0.5925’. Our expectation did not materialize as NZD rose to 0.6002 before retreating quickly. The soft price action early this morning suggests the risk from here is tilted to the downside, That said, any weakness in NZD is unlikely able to maintain a toehold below 0.5900 (next support is at 0.5870). Resistance is at 0.5960 followed by 0.5980. The 0.6002 is unlikely to come into the picture.”
Next 1-3 weeks: “NZD is currently approaching the bottom of our expected 0.5900/0.6100 range. While downward momentum has picked up somewhat, it is too soon to expect the start of a sustained decline in NZD. From here, NZD has to close below 0.5870 in NY in order to indicate that it is ready to move to 0.5800. At this stage, the prospect for such a scenario is not high but it would continue to increase unless NZD moves back above 0.6000 within these few days.”