NZD/USD is expected to meet some consolidation in the next weeks, suggested FX Strategists at UOB Group.
24-hour view: “Yesterday, we highlighted that NZD ‘could weaken further to 0.7165’. We added, ‘the next support at 0.7135 is unlikely to come under threat for now’. Our view was not wrong as NZD rebounded after touching 0.7159. Oversold conditions coupled with waning downward momentum suggests NZD is unlikely to weaken further. For today, NZD is more likely to consolidate and trade between 0.7175 and 0.7220.”
Next 1-3 weeks: “There is not much to add to our update from yesterday (17 Feb, spot at 0.7190). As highlighted, ‘a break of 0.7160 would indicate that NZD could weaken further to 0.7135’. NZD subsequently dropped to 0.7159 before closing on a soft note at 0.7189 (-0.36%). While there is no ‘clear’ break of 0.7160, the risk for NZD is on the downside towards 0.7135. That said, oversold shorter-term conditions could lead to a couple of days of consolidation first. On the upside, a break of 0.7255 (no change in ‘strong resistance’ level) would indicate that the downside risk has dissipated.”