Price action continues to suggest further New Zealand Dollar (NZD) weakness, albeit likely at a slower pace. The levels to watch are 0.6135 and 0.6105, UOB Group FX analysts Quek Ser Leang and Peter Chia note.
NZD may fall towards 0.6135
24-HOUR VIEW: “While our expectation for NZD to ‘continue to weaken’ last Friday was correct, our view that it ‘is unlikely to break below the significant support at 0.6170’ was not. NZD easily broke below 0.6170, reaching a low of 0.6146. Conditions are severely oversold, and instead of continuing to weaken today, NZD is more likely to trade in a 0.6145/0.6205 range.”
1-3 WEEKS VIEW: “Last Wednesday (02 Oct, spot at 0.6285), we noted that ‘downward momentum has increased slightly.’ We held the view that ‘the pullback in NZD could potentially reach 0.6225.’ After NZD dropped below 0.6225, we indicated last Friday (04 Oct, spot at 0.6215) that, ‘momentum has increased further, and NZD could continue to decline to 0.6170.’ We added, ‘we will expect NZD to weaken as long as it remains below 0.6295 (‘strong resistance’ level).’ In NY trade, NZD fell below 0.6170, reaching a low of 0.6146. Although the price action continues to suggest further NZD weakness, oversold conditions suggest a slower pace of decline. The next levels to watch are 0.6135 and 0.6105. On the upside, the ‘strong resistance’ level has moved lower to 0.6220 from 0.6295.”
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