The UOB Group’s FX analysts, Quek Ser Leang and Lee Sue Ann, have offered their insights on the likely trajectory of the NZD/USD currency pair.
They foresee scope for the New Zealand Dollar (NZD) to continue weakening. Despite the current oversold conditions, any decline is not expected to hit last month’s low, which is near 0.5795. In the longer term, the NZD is likely to trade with a downward bias in the direction of 0.5795. For now, the probability of it dropping as low as 0.5770 remains relatively low.
In the 24-HOUR VIEW, when the NZD was at 0.5880 last Friday, the analysts initially thought it “is likely to trade in a higher range of 0.5860/0.5900.” However, this prediction proved incorrect as the NZD dropped to 0.5824 and closed at 0.5832, registering a sharp decline of 0.90% for the day. Today, there’s still potential for the NZD to keep weakening. Given the oversold state, while it might not reach the previous month’s low of around 0.5795 (with another support level at 0.5810), resistance is identified at 0.5845, followed by 0.5865.
Looking at the 1-3 WEEKS VIEW, in their most recent assessment from last Thursday (05 Dec, when the spot was at 0.5860), they expected the NZD to trade within a 0.5830/0.5930 range. But last Friday, the NZD broke below 0.5830 and reached a low of 0.5824. There has been a slight increase in downward momentum, and it’s likely to trade with a downward bias towards 0.5795. Although it’s possible for the NZD to break below this level, the likelihood of it reaching last year’s low of 0.5770 isn’t high at present. To maintain this downward momentum, the NZD must stay below the “strong resistance” level, which currently stands at 0.5890.
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