NZD/USD might not be able to break clearly below 0.5870 – UOB Group

New Zealand Dollar (NZD) could weaken further against US Dollar (USD), but it might not be able to break clearly below 0.5870. In the longer run, bias for NZD is tilted to the downside toward 0.5870, potentially reaching 0.5835, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Bias for NZD is tilted to the downside toward 0.5870

24-HOUR VIEW: "After NZD dropped sharply to 0.5936 two days ago, we indicated that 'the sharp drop appears to be overdone, but NZD could decline to 0.5920 before stabilisation is likely.' We also indicated that 'the major support at 0.5890 is unlikely to come into view.' NZD fell more than expected to 0.5901, and the corresponding increase in momentum suggests further weakness today. However, given that conditions are already oversold, NZD might not be able to break clearly below 0.5870. Resistance levels are at 0.5920 and 0.5940."

1-3 WEEKS VIEW: "Yesterday (08 May, spot at 0.5945), we indicated that NZD 'is still range-trading, likely between 0.5890 and 0.6030.' We did not expect the subsequent drop to 0.5901. There has been a slight increase in momentum, indicating the bias for NZD is tilted to the downside toward 0.5870, potentially reaching 0.5835. The downward bias will remain intact provided that the ‘strong resistance’ level, currently at 0.5960 is not breached."