NZD/USD pullbacks could test 0.7135 – UOB

FX Strategists at UOB Group believes there is still room for further downside in the pair in the short term.

Key Quotes

24-hour view: “We underestimated the strength of the down-move as NZD sliced through several strong supports to hit a low of 0.7169. The decline appears to be running ahead of itself and further sustained weakness is not expected. That said, it is too soon to expect a significant recovery. NZD is more likely to consolidate its loss and trade sideways at these lower levels. Expected range for today; 0.7175/0.7235”.

Next 1-3 weeks: “While we highlighted yesterday that the “downside risk has increased”, the ease of which the strong support at 0.7200 was taken out came as a surprise. The rapid pace of decline suggests that the current pullback has room to extend further towards the August’s low near 0.7135. At this stage, the odds for a break below this level do not appear to be very high. Overall, NZD is expected to stay under pressure in the coming days unless it can reclaim 0.7280”.