Bears can test 0.5950 near term – UOB Group

The New Zealand (NZD) is likely to trade in a range between 0.5950 and 0.5990. In the longer run, there is still no clear increase in downward momentum; the chance of a sustained break below 0.5950 is not high, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Chance of a sustained break below 0.5950 is not high

24-HOUR VIEW: “NZD dropped briefly to 0.5940 yesterday, then rebounded to close at largely unchanged at 0.5978 (+0.09%). The brief decline did not result in any increase in downward momentum, and instead of continuing to decline, NZD is more likely to trade in a range between 0.5950 and 0.5990 today.”

1-3 WEEKS VIEW: “We turned negative in NZD early last month. As we tracked the decline, in our most recent narrative from two days ago (30 Oct, spot at 0.5970), we indicated that ‘While NZD dropped to a fresh 3-month low of 0.5954, there is still no clear increase in downward momentum.’ We added, ‘The chance of a sustained break below 0.5950 is not high.’ Yesterday, NZD dropped below 0.5950, but rebounded quickly from 0.5940. Although NZD broke below the 0.5950 support level, there has been no further increase in momentum. In other words, we continue to hold the view that a sustained break below 0.5950 is not high. Overall, only a breach of 0.6010 (no change in ‘strong resistance’ level) would mean that the weakness has stabilised.”