Levels to watch are 0.5985 and 0.5970 – UOB Group

Oversold decline could extend to 0.5985 before stabilisation can be expected. In the longer run, potential for further declines could be limited; the levels to watch are 0.5985 and 0.5970, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Oversold decline can extend to 0.5985

24-HOUR VIEW: “Our view for NZD to trade in a range yesterday was incorrect. Instead of trading in a range, it fell sharply to 0.5993. Although oversold, the decline could extend to 0.5985 before stabilisation can be expected. Today, a sustained break below this level seems unlikely. Resistance is at 0.6020; a breach of 0.6040 would mean that the weakness in NZD has stabilised.”

1-3 WEEKS VIEW: “On Tuesday (22 Oct, spot at 0.6030), we indicated that ‘the recent price action indicates that 0.6005 is within reach.’ We added, ‘Looking ahead, the next level to watch below 0.6005 is 0.5985.’ Yesterday, NZD dropped below 0.6005, reaching a low of 0.5993. While we continue to expect NZD to decline, the weakness that started early this month (see annotations in the chart below) appears to be overextended, both time- and price-wise. In other words, the potential for further decline could be limited. The levels to watch are 0.5985 and 0.5970. Should NZD break above 0.6060 (‘strong resistance’ level previously at 0.6085), it would mean that NZD is not declining further.”