Instead of continuing to rise, New Zealand Dollar (NZD) is more likely to trade between 0.5825 and 0.5890. In the longer run, the likelihood of NZD declining to 0.5770 has diminished, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

Likelihood of NZD declining to 0.5770 has diminished

24-HOUR VIEW: “After NZD dropped sharply to 0.5824 last Friday, we stated yesterday that ‘there is scope for NZD to continue to weaken.’ However, we pointed out that ‘given the oversold conditions, any decline is unlikely to reach last month’s low, near 0.5795 (there is another support at 0.5810).’ NZD subsequently dropped to 0.5805 before staging a surprisingly sharp advance to 0.5888. The rapid rise appears to be overdone, and instead of continuing to rise, NZD is more likely to trade between 0.5825 and 0.5890 today.”

1-3 WEEKS VIEW: “Yesterday (09 Dec), when NZD was at 0.5835, we indicated that it ‘is likely to trade with a downward bias toward 0.5795.’ We pointed out, ‘the likelihood of it reach 0.5770 is not high for now.’ NZD subsequently dropped to 0.5805 before rebounding strongly to 0.5888. Although our ‘strong resistance’ at 0.5890 has not been breached yet, the slowing momentum suggests the likelihood of NZD declining to 0.5770 has diminished.”