There is a chance for New Zealand Dollar (NZD) to test 0.5565; a continued decline below this level is unlikely. In the longer run, NZD is expected to move lower; if it breaks below 0.5565, it could decline further to 0.5540, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD is expected to move lower

24-HOUR VIEW: "While we expected NZD to 'continue to weaken' yesterday, we pointed out that 'deeply oversold conditions suggest any decline is likely limited to a test of 0.5585'. We pointed out that 'resistance levels are at 0.5625 and 0.5640'. During the NY session, NZD rose briefly to 0.5639 and then dropped sharply to a low of 0.5582. Despite the decline, downward momentum has not increased much. That said, there is a chance for NZD to test the major support at 0.5565. A continued decline below this level is unlikely. Today’s resistance levels are at 0.5600 and 0.5615."

1-3 WEEKS VIEW: "The following are excerpts from our update yesterday (20 Nov, spot at 0.5610): 'Given the sharp increase in downward momentum, we expect NZD to weaken to 0.5585, and potentially 0.5565. We will maintain our view as long as NZD holds below the ‘strong resistance’ level, currently at 0.5660'. NZD subsequently fell to a low of 0.5582. We continue to expect a lower NZD and if it breaks below 0.5565, it could decline further to 0.5540. The ‘strong resistance’ level is now at 0.5640 instead of 0.5660."