NZD/USD: Diminished odds for a drop to 0.6320 – UOB

A deeper pullback to the 0.6320 region looks increasingly unlikely in the near-term, in opinion of FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for NZD ‘to test the 0.6400 support’ did not materialize as it traded in a quiet manner and within a narrow range of 0.6430/0.6474. The underlying tone still appears to be on the soft side and we continue to see chance for NZD to test 0.6400 (minor support at 0.6420). For today, a sustained drop below 0.6400 would come as a surprise. Resistance is at 0.6465 followed by 0.6485.”

Next 1-3 weeks: “Our view from last Friday (12 Jun, spot at 0.6420) was that ‘the near-term bias for NZD is on the downside but any weakness is likely limited to 0.6320 for now’. NZD dropped to 0.6381 yesterday (15 Jun) before staging a sudden and strong surge. While our 0.6510 ‘strong resistance’ level is still intact, downward pressure has been dented and the odds for NZD to move to 0.6320 have diminished considerably. From here, a break of 0.6510 would indicate that NZD could spend some time trading sideways, To look at it another way, it is premature to expect a resumption of the recent strong advance in NZD.”