The New Zealand Dollar (NZD) is expected to trade in a sideways range of 0.5955/0.5995. In the longer run, there is still no clear increase in downward momentum; the chance of a sustained break below 0.5950 is not high, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

NZD may test 0.5995 near term

24-HOUR VIEW: “Two days ago, NZD fell to a low of 0.5958. Yesterday, when NZD was at 0.5985, we held the view that ‘instead of continuing to decline, NZD is more likely to trade sideways between 0.5965 and 0.6005.’ Instead of trading in a range, NZD edged to a low of 0.5954. NZD rebounded from the low to close slightly lower at 0.5974 (-0.12%). The mild decline did not result in any increase in momentum, and we continue to expect NZD to trade sideways. Expected range for today: 0.5955/0.5995.”

1-3 WEEKS VIEW: “We highlighted on Monday (28 Oct, spot at 0.5985) that ‘the recent price action did not result in a significant increase in momentum, but the weakness in NZD has not stabilised.’ We added, ‘The next level to watch is 0.5950, and a breach of 0.6025 (‘strong resistance’ level) would mean that the weakness that started early this month has stabilised.’ While NZD dropped to a fresh 3-month low of 0.5954 yesterday, there is still no clear increase in downward momentum. The chance of a sustained break below 0.5950 is not high. On the upside, the ‘strong resistance’ level has moved lower to 0.6010 from 0.6025.”