The New Zealand Dollar (NZD) has recently shown signs of volatility, with the NZD/USD pair dipping near key support levels. According to UOB Group’s FX analysts, Quek Ser Leang and Lee Sue Ann, while the NZD could break below the critical 0.5940 level, a sustained decline is unlikely, and the pair is expected to trade within a defined range of 0.5940 to 0.6040 in the near term.
Short-Term Outlook: Mixed Signals Amid Market Volatility
In the 24-hour outlook, the NZD/USD pair initially traded within the anticipated range of 0.5955 to 0.5995. However, it unexpectedly surged to 0.6016, before closing at 0.6008, reflecting a 0.58% gain. Despite the rally, a sharp sell-off earlier in the session has created a mixed sentiment in the market. This sudden volatility has led analysts to reassess the immediate outlook, with potential for the NZD to break below the crucial 0.5940 support level.
However, UOB’s analysts caution that a sustained move below 0.5940 remains unlikely. This suggests that the New Zealand Dollar could face some resilience at this key level, likely limiting further downside movement in the short term.
Longer-Term View: Range-Bound Trading Likely to Persist
For a more extended timeframe, the outlook for NZD/USD remains neutral. UOB Group revised their stance on the NZD from negative to neutral earlier this month, signaling that the weakness the pair experienced in early October has likely ended. With this shift, analysts predict that the NZD/USD pair will likely remain in a range between 0.5940 and 0.6040 for the foreseeable future.
The analysts further emphasized that despite some short-term volatility, the New Zealand Dollar is expected to maintain stability within this trading range. Factors such as global market conditions, commodity price movements, and broader risk sentiment will likely influence the currency pair’s fluctuations within this defined band.
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Key Levels to Watch
Traders should closely monitor the 0.5940 support and the 0.6040 resistance levels. A break below 0.5940 could signal deeper bearish momentum, but a swift reversal back above this level would indicate that the NZD is likely to remain within its current range. On the upside, the pair would need to break through 0.6040 to indicate a potential shift toward bullish momentum.
In conclusion, while NZD/USD faces short-term pressures, it is likely to trade within a tight range, with significant support at 0.5940. The near-term outlook suggests that unless there is a decisive break in either direction, the pair is poised to remain range-bound in the coming weeks.
