Rapid rise in New Zealand Dollar (NZD) has scope to test 0.5885 before levelling off becomes likely. In the longer run, NZD appears to have entered a range-trading phase; for the time being, it is likely to trade between 0.5820 and 0.5920, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD appears to have entered a range-trading phase

24-HOUR VIEW: "We indicated last Friday, when NZD was at 0.5820, that 'there is a chance for NZD to test 0.5800 before the risk of a recovery increases.' Although our view was correct, as NZD subsequently dipped to a low of 0.5800, we did not expect the sharp surge during the NY session that sent NZD soaring to a high of 0.5876. The rapid rise has scope to test 0.5885 before levelling off becomes likely. The major resistance at 0.5920 is not expected to come into view. On the downside, support levels are at 0.5845 and 0.5820."

1-3 WEEKS VIEW: "NZD dropped sharply in the middle of last week. In our most recent narrative was from last Thursday (21 Aug, spot at 0.5825), we stated that 'the sharp drop seems excessive, and for a continued decline, NZD must break and hold below 0.5800.' NZD tested the 0.5800 level on Friday, and then surged above our ‘strong resistance’ level at 0.5870. The breach of our ‘strong resistance’ level indicates that downward momentum has eased. NZD appears to have entered a range-trading phase, and for the time being, it is likely to trade between 0.5820 and 0.5920."