NZD/USD now bearish, downside to test 0.7110 – UOB

The perspective for NZD/USD has shifted to bearish from neutral, although the decline seems limited around 0.7110, according to the research team at UOB Group.

Key Quotes

“The plunge in NZD during overnight trading was clearly unexpected as successive strong supports were easily taken out. While further weakness still seems likely, the current decline is over-extended and the pace of any further weakness would likely be slower”.

“NZD broke below the low end of our expected sideway consolidation range of 0.7200/0.7375 and this coupled with the weak daily closing suggests that further NZD weakness is likely in the coming days. That said, the decline appears to be ‘too fast and too much’ and at this stage, we expect the downside risk to be limited to 0.7110. In order to maintain the current momentum, any rebound should not move back above 0.7260”.