The New Zealand Dollar (NZD) could continue to weaken, but any decline will likely be limited to a test of 0.5585. In the longer term, given the sharp increase in bearish momentum, the New Zealand dollar is likely to weaken to 0.5585, and possibly 0.5565, noted UOB Group FX analysts Kwek Ser Liang and Peter Xia.
NZD/USD may continue to weaken
24-hour view: “Yesterday we reported that the New Zealand dollar “appears to have entered a phase of sideways trading between 0.5640 and 0.5680”. Our view was incorrect, as the New Zealand dollar fell to a low of 0.5591. The New Zealand dollar may continue to weaken, but deep oversold conditions suggest that any decline is likely to be limited to a test of 0.5585. Key support is at 0.5565 and is not expected to be exposed. To the threat, resistance levels are located at 0.5625 and 0.5640.
1-3 Week Outlook: “We expected the NZD to trade in a range between 0.5605 and 0.5695 since early last week. The NZD traded within the range until yesterday, when it fell in a surprise move to a low of 0.5591. Given the sharp increase in bearish momentum, we expect the NZD to weaken to 0.5585, and possibly 0.5565. We will maintain our view as long as it remains The New Zealand dollar is below the “strong resistance” level, currently at 0.5660.”
