You sound like you are talking about the New Zealand Dollar technical outlook in regards to a level, 0.5570. Analysts from UOB Group believe that this level could come under test for the NZD, but that a sustained breach below it is unlikely.
In the longer term, they are also seeing increasing risks for the NZD to trend lower, although for this to happen, it would need to break clearly below the 0.5570 support level. If it is unable to do so, support may be found for the NZD at this level or possibly bounce back.
This is a type of analysis that helps understand support and resistance levels, which help traders anticipate potential price movements.
Keylookouts
• NZD will probably test the 0.5570 level, and this level becomes the key support zone in the near term.
• The outlook for NZD in the longer term remains increasingly bearish, with risks of further declines if key levels are breached.
• In case of a confirmed bearish trend, NZD must break clear below the support level of 0.5570.
• A sustained break below 0.5570 seems unlikely; hence, this level may serve as support or act as a reversal point.
UOB Group’s FX analysts, Quek Ser Leang and Lee Sue Ann, recommend that the New Zealand Dollar (NZD) test the 0.5570 level, although a sustained break below this level seems unlikely. The NZD may hold support at this level in the near term and potentially prevent a major decline. The longer-term outlook for the NZD, however, has been moving down and analysts point to increased risk of a decline in the currency. The bearish scenario would need the NZD to break convincingly below the 0.5570 level. Until then, the NZD is expected to hold at or above this support level with potential further movement within this range.
The NZD is expected to test the 0.5570 support level, but a sustained break below it is unlikely, while the longer-term outlook turns to the downside, and the clear break below 0.5570 would confirm the bearish trend.
KEY POINTS
1. The NZD is testing the 0.5570 support level.
2. The immediate perspective of staying below 0.5570 doesn’t look to be in cards.
3. The outlook for NZD in the medium term is increasingly bearish.
4. A confirmed bearish trend for the NZD would occur if it could break below 0.5570 clearly.
5. In case the NZD manages to hold above 0.5570, it would then avoid a quick fall.
6. Failure to break below 0.5570 can lead to a support or reversal
7. Traders will have to track the price actions around 0.5570 very closely to track the direction going forward.
The New Zealand Dollar is testing the 0.5570 support level in the near term. A strong break below this seems unlikely, as it has acted as a key support zone. If NZD can hold above 0.5570, it could avoid a deep decline, with a possibility of finding support or even reversing at this price level. Traders should watch price action closely around this level to gauge the next potential move.
With respect to the intermediate-term and long-term, risk is moving downside for the NZD. The break below the support level at 0.5570 would confirm the bearish trend. However, should such a break occur, then it would mark a direction to further downside movements. However, until then, the NZD breaks clearly below 0.5570, the risk is to bounce or trade range-bound.
Technical Analysis
The New Zealand Dollar is now testing the crucial 0.5570 support level, which has proven strong in recent trading. While a break below this level could happen at some point, a sustained break does not seem probable anytime soon. Meanwhile, the NZD’s long-term trend remains bearish with downside risks continuing to build for the currency. For a confirmed bearish trend to emerge, the NZD needs to break clearly below the 0.5570 support, which would indicate further declines. Until such a break, there is a possibility that the NZD could find support at this level or experience range-bound movement, and therefore, the 0.5570 level is a point of interest for traders to monitor.
NZD/USD Daily Price Charts
Source TradingView, prepared by Ellyana.
FORECAST
If the NZD can hold above the 0.5570 support level, then it may be able to push higher, with the next resistance targets likely around 0.5600 and 0.5650. A break above 0.5570 could indicate a change in momentum, which may lead to a rally if market sentiment improves or if positive economic data emerges from New Zealand. However, for a more significant upward move, the NZD would have to hold the upward pressure and break through these resistance levels, which would indicate a continued bullish trend. Monitoring these key levels will be important in determining any potential upside in the near term.
If the New Zealand Dollar (NZD) breaks below the critical 0.5570 support level, it could signal the start of a bearish trend, with further downside potential. The next support levels in view will most likely be seen around 0.5500 and 0.5450. If prices are maintained below 0.5570, it could have increased downside risks on the pair as it would show broader market weakness or perhaps worse economic data. The New Zealand dollar will have more downside and a strong clear break below 0.5570 may leave room for lower prices. Traders should look for confirmation of a break below this level to gauge the likelihood of further downward movement.
