NZD/USD risks extra losses on a close below 0.7100 in the near-term, noted UOB Group’s FX Strategists.
24-hour view: “We highlighted yesterday that we ‘continue to see chance for NZD to move lower towards 0.7130’. However, NZD rose to 0.7181, closed at 0.7162 before dropping sharply after NY close. The rapid decline appears to be running ahead of itself but there is room for NZD to test 0.7100. The risk for a sustained decline below this major support is low. Resistance is at 0.7150 followed by 0.7180.”
Next 1-3 weeks: “While we continue to hold the view that NZD ‘is likely to trade between 0.7100 and 0.7230’, downward momentum is showing signs of building up and if NZD closes below the major support at 0.7100, it could lead to NZD weakening to 0.7065. The prospect for such a move is not high but would remain intact unless NZD moves above 0.7180 within these couple of days.”