By Areena FxNew Zealand Dollar (NZD) is likely to trade in a sideways range of 0.5940/0.5975 against US Dollar (USD). In the longer run, upward momentum has faded; tentative increase in downward momentum may lead to NZD declining to 0.5940, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.
Upward momentum has faded
24-HOUR VIEW: “NZD dropped sharply two days ago. Yesterday, when it was at 0.5970, we stated that it ‘could decline further, but oversold conditions suggest it might not be able to reach 0.5940.’ We were not wrong, as NZD dropped to a low of 0.5943 before settling at 0.5956 (-0.25%). There are signs of momentum slowing, and NZD is unlikely to weaken much further. Today, we expect NZD to trade in a sideways range of 0.5940/0.5975.”
1-3 WEEKS VIEW: “There is not much to add to our update from yesterday (29 Jul, spot at 0.5970). As stated, the recent ‘upward momentum has faded.’ We also pointed out that “there has been a tentative increase in downward momentum, and this may lead to NZD declining to 0.5940.” For a continued decline, NZD must close below 0.5940. The downward bias is intact as long as NZD holds below the ‘strong resistance’ at 0.6005 (level was at 0.6030 yesterday).”