The New Zealand Dollar (NZD) is expected to trade within a narrow range, likely between 0.6070 and 0.6115, according to UOB Group FX analysts Quek Ser Leang and Peter Chia. While there is a possibility that the NZD could edge lower, the likelihood of it breaking below 0.6045 is currently low.
Limited Downside Risk in Short-Term Outlook
In their 24-hour view, the analysts noted: “The sharp drop in NZD to a low of 0.6060 was unexpected, as we had anticipated consolidation. This sharp decline seems overdone, and further weakening of the NZD is unlikely. Today, the NZD is expected to trade within a range, probably between 0.6070 and 0.6115.”
Medium-Term Perspective Shows Reduced Upward Momentum
Reflecting on the 1-3 week view, the analysts stated: “Last Thursday (04 Jul, spot at 0.6105), we suggested that the recovery in NZD had the potential to extend to 0.6150. After NZD rose, we highlighted on Monday (08 Jul, spot at 0.6145) that ‘the risk is for further NZD strength, with key levels at 0.6180 and 0.6200.’ NZD subsequently reached 0.6171. However, yesterday, it fell and broke below our ‘strong support’ level of 0.6100. The upward momentum has faded, and downward momentum has increased slightly. Going forward, NZD may edge lower, but the prospect of it breaking the major support at 0.6045 is not high. If NZD breaks above 0.6130, it would indicate that downward momentum has eased.”
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