24-hour view: We indicated yesterday that “barring a break above 0.5910, NZD could drop to 0.5840 before stabilisation is likely.” However, NZD traded in a range between 0.5860 and 0.5903. The weakness in NZD does not appear to have stabilised. We continue to hold the view that NZD could drop to 0.5840 before stabilisation is likely. Only a break above 0.5900 (minor resistance is at 0.5885) would mean that the weakness in NZD has stabilised. 

Next 1-3 weeks: Our update from yesterday (06 Sep, spot at 0.5875) still stands. As highlighted, the rapid increase in momentum after the sharp drop on Tuesday is likely to lead to further NZD weakness. That said, it remains to be seen if the major support at 0.5800 is within reach this time around. The downside risk is intact as long as NZD stays below 0.5945 (no change in ‘strong resistance’ level from yesterday).