In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further weakness could force NZD/USD to slip back to the 0.5970 region in the next weeks.

Key Quotes

24-hour view: “Yesterday, we held the view that NZD ‘could break 0.6000’ but we noted that ‘oversold conditions suggest the next support at 0.5970 is unlikely to come under threat’. NZD subsequently dropped to 0.5997 before staging a rapid and robust rebound (high has been 0.6074). The rebound appears to be running ahead of itself and NZD is unlikely to advance much further. For today, NZD is more likely to trade sideways between 0.6020 and 0.6080.”

Next 1-3 weeks: “We highlighted yesterday (07 Sep, spot at 0.6035) that rejuvenated downward suggests NZD is ready to head lower to 0.5970. NZD subsequently dropped to 0.5997 before rebounding strongly. There is no change in our view for now even though oversold shorter-term conditions could lead to 1 to 2 days of consolidation first. Overall, only a break of 0.6095 (no change in ‘strong resistance’ level from yesterday) would indicate that NZD is not weakening further.”