NZD/USD bearish below 0.7200 – UOB

The stance on the Kiwi Dollar should shift to bearish from neutral on a close below the 0.7200 handle vs. the buck, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “NZD dipped below our expected 0.7200/0.7260 consolidation range yesterday and hit a low of 0.7175. The decline was however quickly reversed as NZD jumped back to a high of 0.7742. The price action suggests that a short-term low is place. The current movement is viewed as the early stages of a consolidation phase and NZD is expected to trade sideways, likely within a 0.7195/0.7255 range”.

Next 1-3 weeks: “We have highlighted since Monday (05 Feb, spot at 0.7280) that the correction in NZD has scope to extend lower to 0.7220. This level was easily breached as NZD plummeted to an overnight low of 0.7209. From here, we are seeing strong support at 0.7200 and would prefer to wait for a NY closing below this level before turning bearish. This scenario would not be surprising unless NZD can reclaim 0.7290 within these 1 to 2 days. A shift to a bearish phase would have an immediate target of 0.7140 followed by 0.7100”.