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NZD/USD could extend the downside in the next weeks, although the 0.6930 level is not expected to be tested, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we highlighted that ‘not surprisingly, the rapid drop is oversold but with no sign of stabilization, NZD could weaken further to 0.6960’. We added, ‘the next major support at 0.6930 is not expected to come into the picture’. Our view was not wrong as NZD dropped to 0.6956. While still oversold, it is too early to expect a sizeable recovery. NZD is more likely to consolidate and trade sideways at these lower levels. Expected range for today, 0.6950/0.7020.”

Next 1-3 weeks: “There is no change to our view as highlighted yesterday (24 Mar, spot at 0.7000). We indicated that ‘while shorter-term conditions are oversold, impulsive downward momentum suggests further NZD weakness even though 0.6930 may not come into the picture so soon’. On the upside, a break of 0.7090 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated. On a shorterterm note, 0.7050 is already quite a solid resistance.”