In the opinion of Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group, further retracement lies ahead for NZD/USD in the short-term horizon.
24-hour view: “Yesterday, we highlighted that NZD ‘is likely to weaken further but a drop below 0.6260 is unlikely.’ Our view was correct as NZD dipped to 0.6271 before rebounding to close at 0.6305 (-0.36%). Downward pressure has eased and NZD appears to have moved into a consolidation phase and it is likely to trade between 0.6280 and 0.6340 today.”
Next 1-3 weeks: “There is no change in our view from yesterday (06 Feb, spot at 0.6315) where the risk for NZD has shifted the risk to the downside to 0.6260. Further decline is possible but at this stage, the chance of a break of 0.6195 is not high. Overall, only a breach of 0.6425 (no change in ‘strong resistance’ level from yesterday) would indicate that the downside risk has faded.”