NZD/USD faces a probable retracement to 0.7050 – UOB

The door remains open to further weakness in NZD/USD to the mid-0.7000s in the short-term horizon, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation for the ‘rebound in NZD to extend’ was incorrect as it dropped to 0.7105. Downward momentum has improved, albeit not by much. NZD could edge below the major support at 0.7100 but the next support at 0.7050 is not expected to come under threat. Resistance is at 0.7150 followed by 0.7180.”

Next 1-3 weeks: “We have expected NZD to weaken since last week. In our latest update from yesterday (08 Mar, spot at 0.7180), we highlighted that ‘it may take more than a week before NZD can move below 0.7100’. We did not anticipate the subsequent swift and sharp drop to 0.7105 during NY hours. NZD is still weak and after yesterday’s price actions, a break of 0.7100 is likely. The next support is at 0.7050. On the upside, a break of 0.7210 (‘strong resistance’ level was at 0.7260 yesterday) would indicate the current weakness in NZD has run its course.”