NZD/USD: Downside now looks to 0.6530 – UOB

Further selling pressure could drag NZD/USD to the 0.6530 area, commented FX Strategists at UOB Group Lee Sue Ann.

Key Quotes

24-hour view: “We expected NZD to ‘trade within a range of 0.6585/0.6640’ yesterday. However, NZD dropped to a low of 0.6562. Despite the decline, downward momentum is not strong. NZD could drift lower from here but the major support at 0.6530 is unlikely to come under threat (minor support is at 0.6550). On the upside, a breach of 0.6615 (minor resistance is at 0.6595) would indicate the current mild downward pressure has eased.”

Next 1-3 weeks: “We have expected NZD to weaken since last Friday (22 Apr, spot at 0.6725). As NZD dropped sharply, in our narrative from yesterday (26 Apr, spot at 0.6615), we highlighted that NZD could consolidate for 1 to 2 days first before heading lower to 0.6530. While NZD subsequently dropped to 0.6562, downward momentum has not improved by much. That said, a break of 0.6530 would not be surprising but NZD might not be able to maintain a foothold below this level. The downside risk is intact as long as NZD does not move above 0.6645 (‘strong resistance’ level was at 0.6690 yesterday). Looking ahead, if NZD breaks sharply below 0.6530, the next support level to monitor is at 0.6480.”