UOB predicts continued range bound trade in NZD/USD in the near future
The New Zealand dollar (NZD) has been experiencing a period of range bound trade against the US dollar (USD) in recent times, and according to United Overseas Bank (UOB), this trend is likely to continue in the near future. This prediction comes as a result of various factors that have been influencing the currency pair’s movement.
One of the key factors contributing to the range bound trade is the ongoing uncertainty surrounding the global economic recovery. The COVID-19 pandemic has created significant disruptions in economies worldwide, leading to a cautious approach from investors. As a result, many are opting for safe-haven currencies like the USD, which has put pressure on the NZD.
Additionally, the Reserve Bank of New Zealand (RBNZ) has maintained a dovish stance on monetary policy, which has also impacted the NZD/USD exchange rate. The central bank has expressed concerns about the country’s economic outlook and has signaled that it will keep interest rates low for an extended period. This has made the NZD less attractive to investors seeking higher yields.
Furthermore, the ongoing trade tensions between the United States and China have had a spillover effect on the NZD/USD pair. New Zealand heavily relies on trade with China, its largest trading partner, and any disruptions in this relationship can impact the NZD. The uncertainty surrounding the trade relationship between these two economic giants has added to the range bound trade.
UOB’s prediction of continued range bound trade in NZD/USD is based on technical analysis as well. The currency pair has been trading within a relatively narrow range, with support around 0.6900 and resistance around 0.7100. UOB suggests that unless there is a significant breakthrough in either direction, the NZD/USD is likely to remain within this range.
However, it is important to note that predictions in the foreign exchange market are subject to various uncertainties and can be influenced by unexpected events. Factors such as changes in global economic conditions, geopolitical tensions, or unexpected policy decisions can quickly alter the direction of currency pairs.
In conclusion, UOB predicts that the NZD/USD will continue to experience range bound trade in the near future. The ongoing uncertainty surrounding the global economic recovery, the dovish stance of the RBNZ, and the trade tensions between the US and China are all contributing factors to this trend. However, it is crucial for investors to stay updated on the latest developments and be prepared for any potential shifts in market sentiment that could impact the NZD/USD exchange rate.
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