New Zealand Dollar (NZD) is likely to consolidate in a range of 0.5870/0.5920. In the longer run, slight increase in downward momentum suggests NZD is likely to trade with a downward bias, potentially testing 0.5850, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Slight increase in downward momentum

24-HOUR VIEW: "In the early Asian session yesterday, when NZD was at 0.5935, we highlighted the following: 'While NZD subsequently rose and reached a high of 0.6007, it dropped sharply from the high and continued to decline in the early Asian session today. The decline could test the support at 0.5910 before stabilising. The major support at 0.5880 is unlikely to come into view.' We did not anticipate the rapid downward acceleration, as NZD plummeted to a low of 0.5873. The sharp drop appears excessive, but it is too soon to expect a recovery. Today, we expect NZD to consolidate, most likely in a range of 0.5870/0.5920."

1-3 WEEKS VIEW: "After holding a positive NZD outlook for more than a week, we stated yesterday (18 Sep, spot at 0.5935) that 'the outlook for NZD is no longer positive, but neutral.' We also indicated that 'for the time being, we expect NZD to trade in a range between 0.5880 and 0.5980.' We did not expect the subsequent sharp drop in NZD which dropped below 0.5880 (low was 0.5873). Downward momentum is increasing, but not significantly. From here, NZD is likely to trade with a downward bias, potentially testing the 0.5850 level. On the upside, if NZD breaks above 0.5945, it would indicate that the current downward pressure has eased."