NZD/USD potential extra downside lies ahead – UOB

In opinion of FX Strategists at UOB Group, the Kiwi Dollar risks printing fresh 2018 lows in the next weeks vs. the greenback.

Key Quotes

24-hour view: “Expectation for sideway trading was wrong as NZD plunged to an overnight low of 0.6739. The subsequent weak daily close in NY (at 0.6741) suggests room for a test of the next strong support at 0.6715. The next support is at last month’s low near 0.6690 and for now, this level is unlikely to come into the picture. For today, we expect any rebound to hold below 0.6785 (minor resistance is at 0.6760)”.

Next 1-3 weeks: “NZD closed on a weak note yesterday (NY close of 0.6741, -0.72%) as it tested the bottom of our expected 0.6740/0.6880 consolidation range. Downward pressure has picked up considerably and from here, we see risk of NZD breaking below July’s low of 0.6688 (for a fresh year-to-date low). At this stage, it is unclear whether any weakness in NZD can be sustained as 0.6670/80 is major long-term support and is unlikely to yield so easily. All in, we expect NZD to stay under pressure until it can reclaim the ‘key resistance’ that is currently at 0.6810″.