As long as 0.5980 is not breached, the New Zealand Dollar (NZD) could decline further. The significant support at 0.5900 is highly unlikely to come under threat, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

NZD is trading towards significant support at 0.5900

24-HOUR VIEW: “Yesterday, we held the view that ‘as long as 0.6005 (minor resistance is at 0.5995) is not breached, NZD could decline further.’ We were also of the view that ‘any decline is unlikely to reach 0.5940.’ Our view was not wrong, as NZD fell, reaching a low of 0.5951. While conditions are severely oversold, the weakness in NZD has not stabilised. Today, as long as 0.5980 is not breached (minor resistance is at 0.5965), NZD could weaken further. Given the oversold conditions, the significant support level at 0.5900 is highly unlikely to come under threat. There is another support level at 0.5925.”

1-3 WEEKS VIEW: “Yesterday (23 Jul, spot at 0.5980), we highlighted that ‘while the impulsive downward momentum suggests further NZD weakness, conditions are severely oversold, and it remains to be seen if NZD can break the next support at 0.5940.’ We did not quite expect the continuing sharp decline, as NZD fell to a low of 0.5951. Momentum remains strong, and a breach of 0.5940 will not be surprising. The next level to watch is 0.5900. Should NZD break above 0.6000 (‘strong resistance’ level was at 0.6030 yesterday), it would mean that the weakness that started in the middle of last week (as annotated in the chart below) has stabilised.”