NZD/USD: Outlook remains tilted to the downside – UOB

NZD/USD still risks extra losses in the short-term horizon according to UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang.

Key Quotes

24-hour view: “After NZD dropped to 0.6026 and rebounded, we noted yesterday that ‘downward pressure appears to be intact but any decline is unlikely to challenge 0.5995’. The anticipated weakness exceeded our expectations as NZD dropped to 0.5986 and then rebounded. This time around, downward pressure appears to have faded and NZD is unlikely to weaken further. Today, NZD is more likely to trade sideways in a range of 0.5990/0.6050.”

Next 1-3 weeks: “In our most recent narrative from last Friday (26 May, spot at 0.6060), we held the view that NZD could weaken further, albeit likely at a slower pace. We added, ‘the next level to watch is at 0.5995’. Yesterday (31 May), NZD broke below 0.5995, dropped to 0.5986 and then rebounded. While NZD could continue to weaken, downward momentum is showing tentative signs of slowing and the likelihood for it to drop further to 0.5965 is not high. On the upside, a breach of 0.6085 (‘strong resistance’ level previously at 0.6100) would indicate that the NZD weakness that started in the middle of last week has stabilized.”