It may reach the next major support at 0.6075 – UOB Group

Oversold conditions suggest that any decline in the New Zealand Dollar (NZD) is part of a lower trading range of 0.6105/0.6165. Longer term, NZD still looks weak; Whether it has enough momentum to reach the next major support at 0.6075 remains to be seen, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

NZD still looks weak

24 HOUR VIEW: “We didn’t anticipate the sharp drop in NZD which saw it drop to 0.6113 (we were expecting range trading). The decline has not stabilized, but the severe oversold suggests that any decline is likely to be part of a lower trading range of 0.6105/0.6165. In other words, a clear break below 0.6105 or above 0.6165 is unlikely.”

WEEKS 1-3: “Yesterday (Oct 07, spot at 0.6160), we pointed out that recent price action “continues to suggest further NZD weakness, albeit at a slower pace”. I pointed out that “levels to watch are 0.6135 and 0.6105″. We did not expect the rapid decline to continue as the NZD fell to a low of 0.6113. Although NZD still looks weak, it remains to be seen if NZD has enough momentum to reach the next major support at 0.6075. On the other hand, if the NZD breaks above 0.6195 (the ‘strong resistance’ level was at 0.6220 yesterday), it would mean that the NZD’s weakness from the middle of last week has stabilised.”