The New Zealand Dollar (NZD) is likely to trade in a range, probably between 0.6070 and 0.6115. But NZD could also edge lower; the prospect of it breaking below 0.6045 is not high for now, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

The prospect of breaking below 0.6045 is not high

24-HOUR VIEW: “The sharp drop in NZD that reached a low of 0.6060 was surprising (we were expected consolidation). The sharp drop appears to be overdone, and NZD is unlikely to weaken further. Today, NZD is more likely to trade in a range, probably between 0.6070 and 0.6115.”

1-3 WEEKS VIEW: “Last Thursday (04 Jul, spot at 0.6105), we held the view that the recovery in NZD has potential to extend to 0.6150. After NZD rose, we highlighted on Monday (08 Jul, spot at 0.6145) that ‘the risk is for further NZD strength, and the levels to watch are 0.6180 and 0.6200.’ NZD subsequently rose to 0.6171. Yesterday, it fell and broke below our ‘strong support’ level of 0.6100. Not only has upward momentum faded, but downward momentum has also increased somewhat. From here, NZD could edge lower, but at this time, the prospect of it breaking the major support at 0.6045 is not high. Should NZD break above 0.6130, it would mean that downward momentum has eased.”