The New Zealand Dollar (NZD) could continue to weaken; Oversold conditions suggest that a sustained break below 0.6250 is unlikely. Longer-term, bearish momentum has increased slightly; the pullback in the NZD could potentially reach 0.6225, note UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.
NZD may fall to 0.6225 in the long term
24 HOUR VIEW: “Our view of a sideways trade yesterday was wrong, as the NZD fell sharply to 0.6265 before closing on a weak note at 0.6281 (-1.13%). Not surprisingly, the sharp drop resulted Today, although the NZD could continue to weaken, oversold conditions suggest that a sustained break below 0.6250 is unlikely to come into play. oversold, NZD should not break above 0.6325 with minor resistance at 0.6305.”
1-3 WEEK VIEW: “We have been expecting a higher NZD since the end of last week (as noted in the chart below). After the NZD rose to 0.6379, we highlighted yesterday (Oct 1, spot at 0.6345 ) that “there has been no further increase in momentum, and it is unclear whether the NZD could rise further to 0.6410.” We also highlight that “only a break of 0.6280 (‘strong support’ level) would mean 0.6410 is not within reach.” “The NZD then fell sharply, breaking below 0.6280 (low 0.6265). Not only has the bullish momentum faded, but the bearish momentum has also increased, although not by much. At this time, we see the movements of current prices as a pullback that could potentially reach the significant support at 0.6225. We will maintain the same view as long as the 0.6350 level (‘strong resistance’ level) is not broken.”
Source: Fx Street
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