NZD/USD now faces some consolidation – UOB

NZD/USD is now likely to move within the 0.6500-0.6620 area in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we noted that ‘the underlying tone still appears to be soft and we continue see chance for NZD to test the 0.6520 support’. We highlighted that ‘for today, the next support at 0.6500 is likely out of reach’. Our view was not wrong as NZD dropped to 0.6520 before staging a surprisingly rapid and robust rebound. Downward pressure has dissipated and the current movement is viewed as part of a consolidation phase. For today, NZD is likely to trade between 0.6535 and 0.6600.”

Next 1-3 weeks: “One week ago on 11 Aug (spot at 0.6585), we indicated that NZD ‘is expected to trade with a downward bias towards 0.6520’. When NZD rebounded after touching 0.6524, we highlighted ‘the underlying tone is still soft and NZD could retest the 0.6520 level’. While our view was not wrong as NZD dropped to 0.6520 yesterday (17 Aug), the subsequent sharp bounce from the low was not exactly expected. The mild downward pressure has eased but it is too early to expect a sustained rebound. Overall, NZD is more likely to consolidate and trade between 0.6500 and 0.6620 for a while.”