In the opinion of FX Strategists at UOB Group Quek Ser Leang and Peter Chia, NZD/USD could debilitate further in the short term, although a break below 0.6125 seems unlikely.

Key Quotes

24-hour view: “We highlighted yesterday that NZD ‘is likely weaken further’. We added, ‘in view of the oversold conditions, a clear break of 0.6150 appears unlikely’. Our view was not wrong as NZD dropped to 0.6157 before rebounding to close little changed at 0.6173 (-0.03%). We view the current price actions as part of a consolidation phase and expect NZD to trade between 0.6150 and 0.6210 for today.”

Next 1-3 weeks: “Our update from yesterday (22 Aug, spot at 0.6180) still stands. As highlighted, there is scope for further NZD weakness even though the chance for a break of 0.6125 is not high for now. Overall, only a breach of 0.6240 (‘strong resistance’ level was at 0.6260 yesterday) would indicate that the oversold weakness in NZD has stabilized.”