Although deeply oversold, New Zealand Dollar (NZD) could decline further, but 0.5590 is likely out of reach for now. In the longer run, NZD could weaken further; the level to monitor is 0.5590, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

NZD can weaken further

24-HOUR VIEW: "After NZD fell to a low of 0.5689 on Wednesday, we indicated yesterday (Thursday) that it 'could decline further.' However, we noted that NZD 'does not seem to have enough momentum to break and remain below 0.5680.' However, NZD not only broke clearly below 0.5680 but also dropped further to 0.5630. Although deeply oversold, AUD could decline further. That said, the major support at 0.5590 is likely out of reach for now. On the upside, any recovery is likely to remain below 0.5665 (minor resistance is at 0.5645)."

1-3 WEEKS VIEW: "Yesterday (27 Feb, spot at 0.5700), we highlighted that 'downward momentum is beginning to build, and if NZD breaks and remains below 0.5680, it could trigger a decline to 0.5645.' We did not quite expect NZD to easily break below both 0.5680 and 0.5645. The price action suggests further NZD weakness, and the level to monitor is 0.5590. Overall, the downward pressure would remain intact as long as NZD does not break above 0.5685 (‘strong resistance’ level was at 0.5755 yesterday)."