FX Strategists at UOB Group believe the Kiwi Dollar should remain rangebound in the short-term horizon vs. its American peer.
Key Quotes
24-hour view: “Expectation for NZD to extend its rally was wrong as it staged a swift turnaround from a high of 0.6620 (we expected a ‘test’ of 0.6630). The rapid decline indicates that 0.6620 is a short-term top and this level is expected to remain intact, not only for today but likely for the next couple of days. Meanwhile, the current weakness appears to be running too fast, too soon and while a dip below the overnight low of 0.6545 would not be surprising, the next support at 0.6525 is unlikely to come into the picture. On the upside, 0.6585 is a strong resistance ahead of 0.6620”.
Next 1-3 weeks: “Despite the sharp bounce in NZD that hit a high of 0.6620 early yesterday, we highlighted that it is premature to expect a sustained upmove in NZD. We added, only a clear break of 0.6630 would indicate that NZD is ready for a sustained recovery. That said, the subsequent swift and sharp drop from 0.6620 came as a surprise (overnight low of 0.6545). The risk for a break above 0.6630 has diminished and NZD is more likely to trade sideways from here, expected to be within a broad 0.6490/0.6620 range”.
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