NZD/USD: Has a small chance to reach 0.5740 – UOB Group

New Zealand Dollar (NZD) is likely to drift lower; any decline is unlikely to reach 0.5740. In the longer run, slight increase in momentum could lead to NZD testing the support at 0.5740, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD can test the support at 0.5740

24-HOUR VIEW: “NZD fell to 0.5763 two days ago before recovering slightly. Yesterday, we held the view that it ‘could retest the 0.5765 level before a more sustained recovery can be expected.’ We indicated that ‘should NZD break above 0.5815, it would mean that the current downward pressure has faded.’ The subsequent price action unfolded differently than what we expected. NZD rose to a high of 0.5818 before dropping to 0.5763. NZD closed lower by 0.28% at 0.5768. Downward momentum has increased slightly, and NZD is likely to drift lower today. Given the mild downward momentum, any decline is unlikely to reach 0.6740. Resistance levels are at 0.5785 and 0.5800.”

1-3 WEEKS VIEW: “We indicated two days ago (11 Dec, spot at 0.5800) that NZD ‘may decline below 0.5770.’ However, we pointed out, ‘it remains to be seen if it can maintain a foothold below this level. Yesterday, NZD fell by 0.28% and closed at 0.5768. The resulting slight increase in momentum could lead to NZD testing the support at 0.6740. At this time, the probability of a sustained break below this level is not high. The mild downward pressure would remain intact as long as 0.5830 (‘strong resistance’ level was at 0.5845 yesterday) is not breached.”