NZD/USD: Likely to trade in a range of 0.5900/0.6090 – UOB Group

There is scope for New Zealand Dollar (NZD) to rebound further; overbought conditions suggest 0.6040 is likely out of reach. In the longer run, sharp but short-lived swings have resulted in a mixed outlook; NZD is likely to trade in a range of 0.5900/0.6090 for now, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Short-lived swings have resulted in a mixed outlook

24-HOUR VIEW: "Yesterday, we expected NZD to 'trade in a range of 0.5925/0.5985.' We did not expect the ensuing volatility as NZD first dropped to a low of 0.5884, then rebounded strongly to close at 0.5976 (+0.16%). Although there is scope for NZD to rebound further, overbought conditions suggest any advance is unlikely to reach 0.6040. On the downside, any pullback is likely to hold above 0.5935, with minor support at 0.5965."

1-3 WEEKS VIEW: "Last Friday (20 Jun, spot at 0.5995), we highlighted that 'while there has been an increase in downward momentum, it is not enough to suggest a sustained drop.' We also highlighted that NZD 'must break and hold below 0.5940 before further declines are likely.' Although NZD dropped to a low of 0.5884 yesterday, it rebounded strongly to close 0.5976. Downward momentum has largely faded with the strong rebound. The sharp but short-lived swings have resulted in a mixed outlook. For the time being, NZD could trade in range between 0.5900 and 0.6090."