The New Zealand Dollar (NZD) remains under pressure against the US Dollar (USD), with momentum tilted to the downside after sharp overnight losses. However, while further weakness is likely, analysts at UOB Group — Quek Ser Leang and Peter Chia — believe the next key support at 0.5690 is unlikely to come into play in the near term. The pair is currently expected to test 0.5720 before stabilizing.
Short-term view: scope for test of 0.5720
In their 24-hour outlook, UOB analysts noted that yesterday’s brief rebound gave way to a sharp sell-off. “There has been a slight increase in upward momentum, but this was expected to lead to NZD trading in a higher range of 0.5810/0.5850 rather than a sustained advance,” they wrote.
However, the NZD fell sharply after touching 0.5844, dropping to 0.5795 before extending losses in early Asian trading. “The decline appears excessive, but there is scope for NZD to test 0.5720. The next support at 0.5690 is unlikely to come into view.” Resistance is now seen at 0.5775 and 0.5800.
Medium-term view: outlook turns negative
Over the one- to three-week horizon, UOB analysts said the NZD’s technical tone has turned bearish. In their previous view from October 2, with NZD/USD around 0.5820, they had expected a range-trading phase between 0.5770 and 0.5865.
However, the pair’s subsequent drop below 0.5800 and continued weakness prompted a shift in outlook. “The sharp increase in momentum has turned the outlook for NZD negative,” UOB noted. The analysts added that the level to watch is 0.5690, maintaining a bearish stance as long as the pair stays below 0.5820.
