In opinion of FX Strategists at UOB Group, NZD/USD’s outlook remains negative and is seen navigating within the 0.6590-0.6710 range in the next weeks.
24-hour view: “We did not expect the sudden and sharp decline in NZD that sent it to a low of 0.6630. The swift decline appears to be running ahead of itself and further sustained weakness is unlikely. From here, NZD could dip to 0.6620 but any weakness is viewed as lower trading range of 0.6620/0.6680. The next support at 0.6590 is not expected to come under threat.”
Next 1-3 weeks: “We have held the same view since Monday (26 Oct, spot 0.6685) wherein ‘upward momentum has improved but NZD has to close above 0.6720 before further gains can be expected’. After NZD rose to a high of 0.6724, we indicated yesterday (28 Oct) that ‘momentum has not improved by much and we still prefer to wait for a daily closing above 0.6720 before expecting a more sustained advance’. While our reservations for further NZD strength is not wrong, we did not anticipate the sudden sell-off in NZD yesterday that led to a huge loss of – 1.06% (NZD closed at 0.6637). Upward momentum has dissipated and the current movement is viewed as part of a consolidation phase. Near-term, the bias is tilted to the downside but for now, any weakness is viewed as part of a 0.6590/0.6710 range. In other words, it is too early to expect a clear break of 0.6590.”