Downside pressure mitigated above 0.5985 – UOB

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NZD/USD could see its selling bias alleviated once it breaks above the 0.5985 level, suggest Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia at UOB Group.

Key Quotes

24-hour view: Yesterday, we noted that “momentum indicators are flat”, and we expected NZD to trade in a quiet manner between 0.5905 and 0.5945. NZD then traded in a range of 0.5897/0.5934 before closing largely unchanged (0.5926, +0.03%). Today, NZD could continue to trade in a range, likely between 0.5900 and 0.5945. 

Next 1-3 weeks: We continue to hold the same view as yesterday (21 Aug, spot at 0.5925), wherein the NZD weakness over the past few weeks appears to be slowing. However, only a breach of 0.5985 (‘strong resistance’ level) would indicate that the weakness in NZD has stabilised. That said, the pace of any further decline is likely to be slow, and 0.5870 is likely to offer solid support.