UOB group FX strategists believe NZD / USD could fall below the key support of 0.60 in the short term.
24 hour view: “We did not anticipate the strong sale in NZD which plunged it by -1.32% (New York close of 0.5995), the largest drop of a day in a month . Although clearly oversold, there seems to be room for another lower step towards 0.5960 before the current weakness stabilizes. Resistance is 0.6020 but the strongest level is 0.6050. “
Next 1-3 weeks: “Yesterday, the NZD fell below the expected consolidation range of 0.6000 / 0.6130 which we highlighted on Tuesday (May 12, spot at 0.6060). The rapid recovery in dynamics suggests a further weakness in the NZD around 0.5920. At this stage, the prospect of a lasting decline below this solid support is not high. Overall, the NZD should trade on its back foot unless it can come back above 0.6085 (level of “strong resistance”). “