Further decline could motivate NZD/USD to revisit the 0.6045 region in the near term, according to Economist Lee Sue Ann and Markets Strategist Que Ser Leang at UOB Group.

Key Quotes

24-hour view: “We held view yesterday that NZD ‘could decline further but it is unlikely to break the major support at 0.6135’. While NZD weakened as expected, it cracked 0.6135 and nosedived to 0.6094. Impulsive momentum suggests it could break below the year’s low of 0.6085. Severely oversold conditions suggest NZD might not be able to maintain a foothold below this level and is unlikely to threaten the next support at 0.6045. Resistance is at 0.6125, followed by 0.6145.”

Next 1-3 weeks: “Yesterday (24 May, spot at 0.6185), we indicated that ‘The rapid increase in downward momentum is likely to lead to further NZD weakness. but it is worth noting 0.6135 is a rather strong support level’. We are surprised by how easily NZD took out 0.6135 as it plunged and closed lower by a whopping 2.22% (0.6109), its biggest 1-day drop in more than three months. NZD is likely to weaken further. A break below the year’s low of 0.6085 will shift the focus to 0.6045. The downside risk is intact as long as NZD stays below 0.6185 (‘strong resistance’ level was at 0.6270 yesterday).”