Deeper pullback seen in NZD/USD on a close below 0.62 – UOB

In opinion of FX Strategists at UOB Group, NZD/USD could accelerate its march north on a break below the 0.62 area.

Key Quotes

24-hour view: “Instead of “drifting lower to 0.6235”, NZD dropped briefly to 0.6207 before rebounding strongly. The volatile price action has resulted in a mixed outlook. For today, NZD could continue to trade in a choppy manner but yesterday’s 0.6204/0.6271 range is likely enough to contain the movement for now”.

Next 1-3 weeks: “While we detected the weakened underlying tone yesterday (01 Oct, 0.6260) and indicated that NZD “could drift lower”, we held the view that “odds for a move to 0.6200 are not high”. NZD subsequently plummeted to 0.6204 before rebounding strongly. The underlying tone has deteriorated but oversold conditions suggest that further weakness is likely only if NZD were to register a NY close below 0.6200. Meanwhile, NZD could trade between 0.6200 and 0.6300 for a few days”.