NZD/USD: Likely to trade between 0.5890 and 0.6030 - UOB Group

Sharp drop appears overdone, but New Zealand Dollar (NZD) could decline to 0.5920 against US Dollar (USD) before stabilisation is likely. In the longer run, price action suggests that NZD is still range-trading, likely between 0.5890 and 0.6030, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Price action suggests that NZD is still range-trading

24-HOUR VIEW: "When NZD was at 0.6010 in early Asian trade yesterday, we believed that it 'could break above 0.6030.' We highlighted that it 'might not be able to maintain a foothold above this level, and the next resistance at 0.6060 is probably out of reach.' However, NZD rose less than expected to 0.6023 and then plummeted to 0.5936. The sharp drop appears to be overdone, but NZD could decline to 0.5920 before stabilisation is likely. We do not expect the major support at 0.5890 to come into view. On the upside, resistance levels are at 0.5960 and 0.5985."

1-3 WEEKS VIEW: "On Tuesday (06 May, spot at 0.5955), we were of the view that NZD 'is likely to trade in a 0.5890/0.6005 range for the time being.' Yesterday, Wednesday, when NZD was at 0.6010, we indicated that the increase in momentum could lead to NZD 'trading with an upside bias to 0.6030, with scope to extend further to 0.6060.' We did not anticipate the sharp reversal, as NZD fell and broke below our 'strong support' level at 0.5950. The price action indicates that NZD is still range-trading, likely between 0.5890 and 0.6030."