New Zealand Dollar (NZD) could drop below the major support at 0.5800, but it might not be able to hold below this level. In the longer run, price action indicates that NZD could break below 0.5800 and test the next major support at 0.5775., UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD might also break below 0.5800

24-HOUR VIEW: "The next support at 0.5775 is unlikely to come into view. The sharp drop in NZD that sent it to a low of 0.5807 was surprising (we were expecting range-trading). What is not surprising is that, after such a sharp decline, conditions are deeply oversold. That said, given the strong downward momentum, NZD could drop below the major support at 0.5800. However, it might not be able to hold below this level. The next major support at 0.5775 is unlikely to come into view for now. On the upside, any recovery is likely to hold below 0.5850, with minor resistance at 0.5830."

1-3 WEEKS VIEW: "We highlighted last Friday (19 Sep, spot at 0.5890) that NZD 'is likely to trade with a downward bias, potentially testing 0.5850.' After NZD subsequently declined, we highlighted on Monday (22 Sep, spot at 0.5855) that 'the downward bias remains intact, but it remains to be seen whether 0.5800 is within reach.' NZD then traded in a range for a few days, but yesterday, in a sudden move, it plummeted to a low of 0.5807. The price action not only indicates that NZD could break below 0.5800, but also it may test the next major support at 0.5775. We will maintain our view as long as the ‘strong resistance’ at 0.5865 (level was at 0.5900 yesterday) is not breached."