Further downside could prompt NZD/USD to breach the 0.6200 level in the next weeks, comment FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.
Key Quotes
24-hour view: “While we expected NZD to weaken yesterday, we were of the view that ‘any weakness is unlikely to break the major support at 0.6265’. We did not expect the sharp drop as NZD plummeted to a low of 0.6244. Despite the rebound from the low, the risk is still on the downside. Fromm here, NZD could dip below 0.6240 but in view of the oversold conditions, it is unlikely able to maintain a foothold below this level (the next support at 0.6200 is not expected to come into the picture). Resistance is at 0.6300 followed by 0.6320.”
Next 1-3 weeks: “Three days ago (20 Jun, spot at 0.6320), we highlighted that the outlook for NZD is mixed and we expected NZD to trade sideways within a range of 0.6200/0.6410. While NZD is still trading within the range, shorter-term downward momentum has improved and the prospect of a break of 0.6200 has increased. The risk of NZD breaking 0.6200 would remain intact as long as NZD does not move above 0.6350 (‘strong resistance’ level) within these couple of days.”