According to FX Strategists at UOB Group, the stance on NZD/USD remains bearish and the door stays open for a move to the 0.6300 region in the next weeks.
Key Quotes
24-hour view: “Our expectation for the weakness in NZD to “extend lower” was incorrect as it rebounded to a high of 0.6372. While downward pressure has dissipated, the current movement is viewed as part of consolidation phase and not the start of a sustained recovery. In other words, NZD is expected to trade sideways for today, likely between 0.6340 and 0.6390”.
Next 1-3 weeks: “While we held the view that a “short-term top is in place” and NZD is likely to “trade sideways” since last Tuesday, we highlighted on Thursday (07 Nov, spot at 0.6365) that “if NZD were to close below the bottom of the expected 0.6350/0.6450 range”, it would “increase risk of a pull-back to 0.6300”. NZD dropped to 0.6323 last Friday before ending the day at 0.6328 (-0.65%). In other words, instead of trading sideways, NZD is now expected to trade with a downward bias towards 0.6300. At this stage, the prospect for a sustained decline below this level is not high (there is another support at 0.6285). On the upside, only a move above 0.6400 (‘strong resistance’ level) would indicate that current downward bias has eased”.
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