While further downside is likely in the next weeks, NZD/USD is expected to meet strong contention in the 0.6150 region, note FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the deeply oversold decline in NZD has scope to extend but a break of 0.6175 is unlikely’. NZD subsequently dipped to 0.6214 before rebounding strongly. Downward pressure has eased and NZD is unlikely to weaken further. For today, NZD is more likely to trade sideways within a range of 0.6240/0.6290.”

Next 1-3 weeks: “We continue to hold the same view as yesterday (03 Aug, spot at 0.6230). As highlighted, NZD is likely to trade with a downward bias even though any weakness is expected to encounter solid support at 0.6150. Overall, only a break of 0.6315 (no change in ‘strong resistance’ level from yesterday) would indicate that the current downward pressure has eased.”