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In opinion of FX Strategists at UOB Group, NZD/USD could visit the 0.62 area on a close below the 0.6255 level.

Key Quotes

24-hour view: “We highlighted yesterday, “there is scope for NZD to test 0.6340 first before the current advance should ease off”. While NZD rose to 0.6349, the subsequent sharp sell-off was not exactly expected (overnight low of 0.6267). The decline is running too fast, too soon and further sustained weakness is not expected. NZD is more likely to consolidate its loss and trade sideways to slightly lower, expected to be within a 0.6255/0.6295 range”.

Next 1-3 weeks: “We indicated yesterday (25 Sep, spot at 0.6320) that the recent “weakness has stabilized” and expected NZD to “trade sideways” between 0.6260 and 0.6360. NZD subsequently rose to 0.6349 before plunging back down to 0.6267. The volatile price action was not exactly expected as NZD registered a range of 82 pips (the largest 1-day range since the shock 50bps rate by RBNZ in early Aug). From here, if NZD were to register a NY close below last week’s 0.6255 low, it would indicate that NZD could weaken further to 0.6200. At this stage, the prospect for such a scenario is not that high but it would continue to increase unless NZD can move above 0.6320 (‘strong resistance’ level) within these few days”.