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NZD will struggle while pandemic concerns persist. Despite solid domestic fundamentals, Q1 activity will be hit hard, but Q2 should rebound, in the opinion of strategist at Westpac Institutional Bank. 

Key quotes

“NZD/USD broke the 0.6380 support level yesterday, signalling a further fall to the low 0.63s during the week ahead.”

“Even if our assumptions of a short-lived (Q1) virus impact followed by a sharp Q2 rebound prove correct, markets are initially likely to be more fixated on the Q1 decline in economic indicators than the forecasted rebound.”

“A more bearish climate for the NZD for at least another month is suggested before NZ’s fundamentals can reassert themselves and lift NZD/USD to 0.6600 by Q3.”