In opinion of FX Strategists at UOB Group, the downside pressure around NZD/USD looks mitigated.
Key Quotes
24-hour view: “The sharp and abrupt bounce in NZD that sent it soaring to an overnight high of 0.6493 came as a surprise. While the rapid rise appears to be running ahead of itself, there is scope for NZD to test 0.6505 first before an easing of the current upward pressure can be expected. Support is at 0.6440 followed by 0.6410.”
Next 1-3 weeks: “After NZD dropped sharply from a high of 0.6585, we highlighted on 12 Jun (spot at 0.6420) that the ‘near-term bias is on the downside but any weakness is likely limited to 0.6320 for now’. NZD subsequently traded sideways for several days and yesterday (22 Jun, spot at 0.6405), we detected the picked-up in downward momentum and held the view that ‘chance of 0.6320 coming into the picture has increased’. Our expectation was proven wrong quickly as NZD soared above the ‘strong resistance’ level at 0.6480 (overnight high of 0.6493). Downward pressure has more or less dissipated and from here, NZD is expected to consolidate and trade between 0.6380 and 0.6550.”
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