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In light of the ongoing price action, NZD/USD risks a move to the 0.5800 area in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected NZD to weaken last Friday but were of the view ‘Monday’s low of 0.6008 is unlikely to come into the picture’. While our view was not wrong as NZD rebounded from 0.6018 and closed at 0.6057, it briefly plunged below 0.6008 this morning after the emergency rate cut from RBNZ (low of 0.5929). The sharp bounce from 0.5929 suggests a temporary bottom could be in place. That said, it is too early to expect a sustained recovery. From here, further choppy price action would not be surprising but NZD should stay between 0.5950 and 0.6160.”

Next 1-3 weeks: “We updated last Friday (13 Mar, spot at 0.6115) the ‘odds for a break of 0.6000 have increased considerably’. While NZD did not break this level on Friday (low of 0.6018), it crashed below this level and hit 0.5929 this morning (after emergency rate cut by RBNZ). From here, the focus has shifted to 0.5800. That said, this level may not come into the picture so soon. ‘Strong resistance’ has moved lower to 0.6300. Only an unlikely move above this level would indicate the current weakness has stabilized.”

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