NZD/USD downside mitigated above 0.7285 – UOB

FX Strategists at UOB Group noted the downward pressure around the Kiwi Dollar should ease on a breakout of 0.7285.

Key Quotes

24-hour view: “We expected NZD to “attempt to move lower towards last month’s 0.7176 low yesterday” but were of the view that a sustained move below this level was unlikely. However, NZD only managed to touch a low of 0.7186 before staging a surprisingly robust recovery. Downward pressure has clearly eased and the rapid rebound has room to extend higher and test the strong 0.7285 resistance. At this stage, a clear break above this level is not expected (next resistance is at 0.7310). Support is at 0.7225 followed by 0.7200. The 0.7186 low is not expected to come into the picture”.

Next 1-3 weeks: “We have held the same view that NZD is forming a ‘potential double-top’ since last Wednesday (21 Feb, spot at 0.7340) but highlighted yesterday the “odds for sustained break below 0.7176 are not very high”. 0.7176 is the ‘neckline of the potential double-top and the sharp and swift rebound from a low of 0.7186 yesterday has lessened the odds further. For now, another push lower towards 0.7176 is not ruled out but a break above 0.7285 is enough to indicate that the week-long downward pressure has eased”.