In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, further downside could drag NZD/USD to the 0.6260 region in the next weeks.

Key Quotes

24-hour view: “We highlighted yesterday that NZD ‘is still consolidating’ and we expected it to ‘trade within a range of 0.6285/0.6360’. Our view for consolidation was not wrong even though NZD traded within a narrower range than expected (0.6298/0.6348). The price actions offer no fresh clues and NZD is likely to consolidate further. Expected range for today, 0.6290/0.6360.”

Next 1-3 weeks: “On Monday (06 Feb, spot at 0.6315), we highlighted that the risk for NZD has shifted to the downside to 0.6260. We added, ‘Further decline is possible but at this stage, the chance of a break of 0.6195 is not high’. There is no change in our view but oversold short-term conditions could lead to a couple of days of consolidation first. Overall, only a breach of 0.6400 (no change in ‘strong resistance’ level) would indicate that NZD is not weakening further.”