In the view of UOB Group’s Economist Lee Sue Ann and Markets Strategist Quek Ser Leang, NZD/USD could weaken to the sub-0.6000 region in the short-term horizon.

Key Quotes

24-hour view: “We highlighted yesterday that while NZD could dip below Friday’s low of 0.6034, a clear break of 0.6025 is unlikely. We added, any weakness is part of a lower range of 0.6025/0.6085”. Our expectation for NZD to dip below 0.6034 did not materialize as it traded in a range of 0.6046/0.6070. The underlying tone has softened and today, a break of 0.6034 will not be surprising. That said, any decline is highly unlikely to challenge the major support at 0.5995. Resistance is at 0.6065, followed by 0.6085.”

Next 1-3 weeks: “Our latest narrative from last Friday (26 May, spot at 0.6060) still stands. As highlighted, NZD could weaken further, albeit likely at a slower pace and the next level to watch is 0.5995. On the upside, a breach of 0.15 (‘strong resistance’ level was at 0.6130) indicates the weakness in NZD that started in the middle of last week has stabilized.”