Further New Zealand Dollar (NZD) weakness appears likely; any decline may not reach the major support at 0.5850. In the longer run, likelihood of NZD dropping to 0.5850 has increased, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
NZD weakness appears likely
24-HOUR VIEW: “Yesterday, when NZD was at 0.5925, we held the view that NZD ‘is likely to trade with a downward bias towards 0.5900.’ We were also of the view that ‘a sustained break below 0.5900 is unlikely.’ The anticipated weakness exceeded our expectations, as NZD dropped to a low of 0.5876, closing at 0.5882 (-0.76%). Further weakness appears likely today, but oversold conditions suggest any decline may not reach the major support at 0.5850 (there is another support at 0.5865). On the upside, a breach of 0.5920 (minor resistance is at 0.5905) would mean that NZD is not weakening further.”
1-3 WEEKS VIEW: “We revised our view from neutral to negative yesterday (13 Nov, spot at 0.5925), indicating that ‘Despite the slight increase in momentum, the risk for NZD appears to have shifted to the downside.’ However, we noted that ‘it is too early to tell if the major support at 0.5850 is within reach.’ NZD subsequently dropped to 0.5876. The increase in momentum indicates that the likelihood of NZD dropping to 0.5850 has also increased. To maintain the buildup in momentum, NZD must remain below the ‘strong resistance’ at 0.5955 (level was at 0.5975 yesterday).”
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