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NZD/USD could likely move to a consolidative phase in the near term, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We did not anticipate the sharp drop in NZD yesterday (overnight low of 0.7043). Oversold conditions coupled with the bounce during early Asian hours suggest that NZD is unlikely to weaken much further. For today, NZD is more likely to trade between 0.7040 and 0.7120.”

Next 1-3 weeks: “We have expected NZD to weaken since Monday (14 Jun, spot at 0.7130) where we indicated that NZD is expected to trade under pressure but ‘0.7080 may not come into the picture so soon’. The sharp overnight plunge that sent NZD to 0.7043 came as a surprise. Further NZD weakness is not ruled out but oversold shorter-term conditions could lead to a couple of days of consolidation first. The next support below 0.7040 is at 0.7000. Overall, the downward pressure is deemed intact unless NZD can move above 0.7150 (‘strong resistance’ level was at 0.7190 yesterday).”