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FX Strategists at UOB Group do not rule out a deeper drop in NZD/USD to the 0.6140 area in the next weeks.

Key Quotes

24-hour view: “Our expectation for ‘further NZD weakness’ did not materialize as it rebounded from an initial decline and subsequently traded sideways. Indicators are unwinding from oversold conditions and NZD is expected to trade sideways from here, albeit likely at a higher range of 0.6230/0.6290.”

Next 1-3 weeks: “Our view that ‘downward momentum has eased’ from last Friday (28 Feb, spot at 0.6305) was wrong as NZD lurched lower and crashed to a 4-1/2 –year low of 0.6192 before rebounding sharply. While severely oversold, the sudden pick-up in momentum suggests NZD could weaken further to 0.6140. Only a move above 0.6300 would indicate the current weakness has stabilized.”