The New Zealand Dollar (NZD) is expected to continue to weaken; given the deeply oversold conditions, it remains to be seen if 0.5815 will come into view. In the longer run, outlook for NZD remains negative; the technical target now is at last year’s low of 0.5775, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
NZD is expected to continue to weaken
24-HOUR VIEW: “After NZD fell and exceeded our expectations two days ago, we indicated yesterday that ‘Further weakness appears likely today, but oversold conditions suggest any decline may not reach the major support at 0.5850.’ The anticipated weakness once again exceeded our expectations, as NZD fell to a low of 0.5840. Although we continue to expect NZD to weaken today, given the deeply oversold conditions, it remains to be seen if the next support at 0.5815 will come into view. To keep the momentum going, NZD must remain below 0.5885, with minor resistance at 0.5865.”
1-3 WEEKS VIEW: “When we revised our NZD view from neutral to negative two days ago (13 Nov, spot at 0.5925), we indicated that ‘it is too early to tell if the major support at 0.5850 is within reach.’ Following the decline in NZD, we highlighted yesterday (14 Nov, spot at 0.5885) that ‘The increase in momentum indicates that the likelihood of NZD dropping to 0.5850 has also increased.’ In NY trade, NY dropped to 0.5840. Our negative outlook for NZD remains unchanged; the technical target is now at last year’s low of 0.5775. To maintain the buildup in momentum, NZD must remain below the ‘strong resistance’ at 0.5925 (level was at 0.5955 yesterday).”
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