The New Zealand Dollar (NZD) is expected to weaken further due to strong momentum. However, UOB Group strategists believe that the major support level at 0.6040 is unlikely to be threatened at this time.
In the short term, if the NZD breaks above 0.6135, it could halt the downward momentum. Despite the likelihood of continued weakness, the oversold conditions suggest that the major support at 0.6040 should hold, with additional support at 0.6060. To sustain the downward trend, the NZD needs to stay below 0.6110, with minor resistance at 0.6095.
Looking ahead to the next 1-3 weeks, the NZD is anticipated to continue its decline, with a potential target of 0.6085. Following a sharp drop to 0.6075 in New York trading, momentum has increased, indicating a further weakening of the NZD. The next key support level to monitor is 0.6040, with a breach of 0.6135 necessary to indicate a reversal in the weakening trend.