The New Zealand Dollar (NZD) is likely to trade sideways between 0.5860 and 0.5900. Further NZD weakness is not ruled out; severely oversold conditions suggest limited downside potential. The level to monitor is 0.5850, UOB Group FX strategists Quek Ser Leang and Peter Chia note.

NZD is set to test the 0.5900 resistance

24-HOUR VIEW: “Our view of NZD trading in a 0.5875/0.5920 range was incorrect. NZD dipped to a low of 0.5859 and then rebounded to close at 0.5876 (-0.23%). Despite the decline, downward momentum has not increased much, and NZD is unlikely to weaken much further. Today, NZD is more likely to trade sideways between 0.5860 and 0.5900.”

1-3 WEEKS VIEW: “Last Friday (26 Jul, spot at 0.5890), we indicated that ‘while further NZD weakness is not ruled out, severely oversold conditions suggest limited downside potential.’ We indicated that ‘the next level to monitor is 0.5850.’ Yesterday, NZD dropped to a low of 0.5859 before rebounding. The price action did not result in a further increase in downward momentum. For the time being, we will continue to hold the same view. Only a breach of 0.5930 (‘strong resistance’ previously at 0.5955) would suggest that NZD weakness that started about two weeks ago has come to an end.”