The combination of slowing momentum and oversold conditions suggest New Zealand Dollar (NZD) is likely to consolidate, probably between 0.5715 and 0.5750. In the longer run, downward momentum remains mild, but NZD could continue to edge lower toward 0.5690, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD might continue to edge lower toward 0.5690

24-HOUR VIEW: "While we expected NZD to 'continue to decline' last Friday, we pointed out that it 'does not appear to have sufficient momentum to reach 0.5715'. Our view of a lower NZD was not wrong, even though during the NY session, it dropped briefly below 0.5715 and touched 0.5712 before recovering to close at 0.5733 (-0.36%). The combination of slowing downward momentum and oversold conditions suggests that NZD is likely to consolidate today, probably between 0.5715 and 0.5750."

1-3 WEEKS VIEW: "We turned negative on NZD last Friday (09 Jan, spot at 0.5750), indicating that 'downward momentum has increased slightly, and NZD could edge lower toward 0.5715'. NZD subsequently fell to a low of 0.5712. While downward momentum remains mild, NZD could continue to edge lower toward 0.5690. Overall, only a breach of 0.5770 (‘strong resistance’ level was at 0.5785 last Friday) would indicate that the current mild downward pressure has eased."