Oversold conditions suggest any decline in the New Zealand Dollar (NZD) is part of a lower trading range of 0.6105/0.6165. In the longer run, NZD still seems weak; it remains to be seen if it has enough momentum to reach the next major support at 0.6075, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD still seems weak

24-HOUR VIEW: “We did not anticipate the sharp drop in NZD that sent it plummeting to 0.6113 (we were expecting range trading). The decline has not stabilised, but severely oversold suggests any decline is probably part of a lower trading range of 0.6105/0.6165. In other words, a clear break below 0.6105 or above 0.6165 is unlikely.”

1-3 WEEKS VIEW: “Yesterday (07 Oct, spot at 0.6160), we highlighted that the recent price action “continues to suggest further NZD weakness, albeit at a slower pace.” We pointed out that “the levels to watch are 0.6135 and 0.6105.” We did not expect the continuing rapid decline, as NZD fell to a low of 0.6113. While NZD still seems weak, it remains to be seen if NZD has enough momentum to reach the next major support at 0.6075. On the upside, if NZD breaks above 0.6195 (‘strong resistance’ level was at 0.6220 yesterday), it would mean that the NZD weakness from the middle of last week has stabilised.”