NZD/USD decline could extend to 0.6800 – UOB

FX Strategists at UOB Group stay bearish on the Kiwi Dollar and expect the pair to test the 0.6800 handle in the next weeks.

Key Quotes

24-hour view: “While we expected a lower NZD yesterday, we underestimated the extent of the decline as it dropped sharply and quickly to a low of 0.6855. The down-move appears incomplete and further weakness to 0.6830 seems likely (next support at 0.6800 is likely out of reach for today). Stabilization is only upon a move back above 0.6910 (minor resistance is at 0.6890)”.

Next 1-3 weeks: “While we highlighted yesterday (15 May, spot 0.6915) that “a move below 0.6900 seems likely now”, we added “0.6850 could be out of reach”. The subsequent sharp decline that hit an overnight low of 0.6855 came as a surprise and indicates that the bearish phase that started earlier this month (02 May, spot at 0.7005) has scope to extend further to 0.6800. On the upside, we adjust the ‘stop-loss’ level lower to 0.6940 from 0.6975”.