NZD/USD still neutral, room for a test of 0.6475 – UOB

The prospect on the Kiwi Dollar remains neutral in the short-term horizon and it could test the 0.6475 level, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “Against our expectation for sideway trading, NZD plummeted and eked out a fresh year-to-date low of 0.6541 (previous low at 0.6545). The subsequent weak daily closing in NY suggests further downward pressure but in view of the oversold conditions, a break below 0.6500 seems unlikely (0.6520 is a relatively strong level). Only a break above 0.6595 would indicate that the current weakness has stabilized (minor resistance is at 0.6570)”.

Next 1-3 weeks: “We have held the same view since Monday (03 Sep, spot at 0.6610) wherein we expect NZD to “grind lower towards the year-to-date low of 0.6545”. While expectation for a lower NZD was correct, the rapid and sharp decline of -0.72% yesterday came as a surprise. Despite the large drop, we have doubts about the sustainability of any further down-move in NZD. All in, we hold a ‘negative’ view now and see scope for further NZD weakness to 0.6475. At this stage, we apportion low odds for a clear break below this level. On the upside, only a break of the ‘key resistance’ at 0.6620 would indicate that a short-term low is in place”.