Scope for New Zealand Dollar (NZD) to continue to weaken; given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795. In the longer run, NZD is likely to trade with a downward bias towards 0.5795; the likelihood of it reaching 0.5770 is not high for now, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of it reaching 0.5770 is not high for now

24-HOUR VIEW: “When NZD was at 0.5880 last Friday, we were of the view that it ‘is likely to trade in a higher range of 0.5860/0.5900.’ Our view was incorrect, as it dropped to 0.5824, closing at 0.5832, sharply lower by 0.90% for the day. Today, there is scope for NZD to continue to weaken. Given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795 (there is another support at 0.5810). Resistance is at 0.5845, followed by 0.5865.”

1-3 WEEKS VIEW: “Our most recent narrative was from last Thursday (05 Dec, spot at 0.5860), wherein NZD is ‘expected to trade in a 0.5830/0.5930 range.’ Last Friday, NZD broke below 0.5830, reaching a low of 0.5824. There has been a slight increase in momentum, and NZD is likely to trade with a downward bias towards 0.5795. While NZD could break below this level, the likelihood of it reaching last year’s low of 0.5770 is not high for now. To sustain the momentum, NZD must remain below the ‘strong resistance’ level, currently at 0.5890.”