NZD/USD: a test of 0.6300 looks unlikely for the time being – UOB

According to FX Strategists at UOB Group, the Kiwi Dollar is unlikely to test the 0.6300 support in the near term at least.

Key Quotes

24-hour view: “While we expected NZD to weaken yesterday, we were of the view that “a break of the month-to-date low near 0.6380 is unlikely”. However, NZD declined more than expected as it dropped to 0.6362. The weakness appears to be running ahead of itself and for today, the major 0.6350 level is unlikely to come into the picture. That said, it is too early to expect a sustained rebound. NZD is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today, 0.6365/0.6415″.

Next 1-3 weeks: “We have held the same view since Monday (19 Aug, spot at 0.6430) that despite lackluster downward momentum, there is “still chance for NZD to weaken to 0.6350″. After trading in a quiet manner for several days, NZD perked up as it dropped to 0.6362 (before ending the day lower by -0.65%, largest 1-day drop in about 2 weeks). From here, 0.6350 appears to be within sight but the more pertinent question is whether NZD can move below this level on a sustained basis. At this stage, a dip below 0.6350 would not be surprising but for the next week or so, the next support at 0.6300 could be just out of reach. All in, a short-term bottom is deemed to be in place only if NZD can move above 0.6455 (‘key resistance’ was at 0.6470 yesterday)”.