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NZD/USD still does not rule out a drop below the 0.7100 level in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the sharp and rapid decline appears to be overdone and NZD is unlikely to weaken further’ and we expected NZD to ‘consolidate and trade between 0.7115 and 0.7160’. While our view for consolidation was not wrong, NZD traded within a narrower range than expected (0.7127/0.7152). The current movement is still viewed as a consolidation and NZD is likely to trade between 0.7125 and 0.7160 for today.”

Next 1-3 weeks: “After the sharp drop in NZD last Friday, we highlighted yesterday (14 Jun, spot at 0.7130) that ‘further NZD weakness is not ruled out but the sharp and rapid drop appears to be running ahead of itself and the next support at 0.7080 may not come into the picture so soon’. There is no change in our view and we continue to expect NZD to trade under pressure unless it can move above 0.7190 (no change in ‘strong resistance’ level).”