New Zealand Dollar (NZD) is likely to range-trade between 0.5690 and 0.5730. In the longer run, there is a chance for NZD to test 0.5660 before the risk of a stronger recovery increases, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Likely to range-trade between 0.5690 and 0.5730

24-HOUR VIEW: "We expected NZD to 'test 0.5710' yesterday. However, we highlighted that 'the major support at 0.5690 is unlikely to come into view.' Our view of a lower NZD was correct, even though we didn’t expect the decline that reached a low of 0.5685. NZD recovered strongly from the low and closed slightly lower by 0.21% at 0.5714. Downward pressure has eased with the recovery, and instead of weakening today, NZD is more likely to range-trade, probably between 0.5690 and 0.5730."

1-3 WEEKS VIEW: "In our most recent narrative from last Wednesday (08 Oct, spot at 0.5750), we indicated that 'the outlook for NZD has shifted to negative, and the level to watch is 0.5690.' It took a few days, but NZD finally reached 0.5690, dropping to a low of 0.5685 yesterday. While there has been no significant increase in downward momentum, as NZD recovered from the low, there is a chance for NZD to test 0.5660 before the risk of a stronger recovery increases. However, if NZD breaks above 0.5750 (‘strong resistance’ level previously at 0.5780), it would mean that it is not declining further."