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FX Strategists at UOB Group remain neutral on the Kiwi Dollar, adding that the pressure has now shifted to the downside.

Key Quotes

24-hour view: “Expectation for sideway trading yesterday was wrong as NZD dropped sharply to a low of 0.6848. While downward momentum is not strong, the current soft patch in NZD could lead to a test of last week’s low near 0.6825. At this stage, a sustained break below this level is not expected. Resistance is at 0.6875 followed by 0.6900″.

Next 1-3 weeks: “The relatively large decline of -0.66% in NZD yesterday came as a surprise. While there is no change to the current neutral outlook, the short-term pressure has shifted to the downside and last week’s low near 0.6825 appears to be vulnerable. That said, it is unclear at this stage whether any weakness in NZD can be sustained. Note that there are a couple of very strong supports below 0.6825, namely at the round-number level of 0.6800 and last year’s low of 0.6780. In view of the lackluster momentum, the prospect for a sustained move below these major support levels does not appear to be high. That said, NZD is expected to stay under pressure for now unless it can reclaim the ‘key resistance’ at 0.6920