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FX Strategists at UOB Group believe NZD/USD could slip back and re-test the 0.5920 region in the next week.

Key Quotes

24-hour view: “Yesterday, we held the view that NZD ‘could dip below 0.6000 but may not be able to hold below this level’. However, the 0.6000 level was unthreatened as NZD rebounded from 0.6010. Downward momentum has dissipated and this coupled with still oversold conditions suggests there is room for the current rebound to extend higher. That said, any advance is expected to face solid resistance at 0.6090 (the next resistance at 0.6120 is not expected to come into the picture). Support is at 0.6040 and the 0.6010 low is acting as a very strong support for today.”

Next 1-3 weeks: “In our latest update from last Thursday (30 Apr, spot at 0.6120), we held the view that NZD ‘is likely to advance to 0.6180’. NZD subsequent rose to 0.6176 before staging a surprising sharp and rapid pullback. Upward momentum has eased and the 0.6176 high is likely a short-term top. From here, the pullback in NZD could edge lower to 0.5920. At this stage, the prospect for a sustained decline below this level is not high. On the upside, only a move above 0.6120 would indicate the current downward pressure has eased.”