NZD/USD: The focus is now on the 0.6600 region – UOB

NZD/USD could accelerate the downside to the 0.6600 level in the next weeks, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that the ‘pullback in NZD could extend lower but any weakness is viewed as part of a 0.6740/0.6780 range’. However, NZD plunged to a low of 0.6653 before ending the day sharply lower at 0.6670 (-1.33%). The rapid improvement in downward momentum suggests further NZD weakness towards 0.6630. For today, the next support at 0.6600 is likely out of reach. On the upside, 0.6725 is likely strong enough to cap any intraday recovery (minor resistance is at 0.6700).”

Next 1-3 weeks: “Our latest narrative was from last Friday (18 Sep, spot at 0.6765) wherein ‘upward momentum has improved but NZD has to close above 0.6800 before further sustained advance can be expected’. NZD subsequently rose to a high of 0.6798 before staging a sudden and sharp decline yesterday (21 Sep). The outsize drop is accompanied by strong downward momentum and NZD is likely to weaken further to 0.6600. Resistance is at 0.6725 but only a move above 0.6760 would indicate that our view is wrong.”