The New Zealand Dollar (NZD) appears to be in oversold territory, with any further declines likely confined within the lower trading range of 0.6105 to 0.6165, according to UOB Group FX analysts Quek Ser Leang and Lee Sue Ann. Despite the current weakness, it remains uncertain whether the NZD has enough momentum to reach the next key support level at 0.6075.
Short-Term View:
“We didn’t anticipate the sharp drop in the NZD, which tumbled to 0.6113, as we initially expected range-bound trading. While the decline hasn’t stabilized, oversold conditions suggest that any further drop will likely stay within the 0.6105/0.6165 range. A clear break below or above these levels seems unlikely in the near term,” the analysts noted.
Outlook for 1-3 Weeks:
The analysts also highlighted that the recent price action continues to indicate ongoing NZD weakness, though at a slower pace. After the currency fell to a low of 0.6113, it remains to be seen if it will continue downward to the major support level at 0.6075. A break above 0.6195 would signal that the weakness observed since mid-last week has stabilized, with strong resistance noted at 0.6220.
RBNZ POLICY DECISION OF RATE CUT
As the Reserve Bank of New Zealand (RBNZ) prepares to announce its policy decision tomorrow at 9 a.m. (SGT), the New Zealand Dollar (NZD) is hovering around 0.6118, according to OCBC FX strategist Christopher Wong. Market expectations suggest the RBNZ may accelerate its rate cuts, with a potential 50 basis point reduction at each of the remaining two Monetary Policy Committee (MPC) meetings this year and an additional 100 basis points by mid-2025.
With dovish expectations largely priced in and the NZD having already fallen more than 2% over the past week, Wong notes that the currency may face a “sell on rumor, buy on fact” scenario unless the RBNZ adopts an even more dovish stance in its upcoming announcement.
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