New Zealand Dollar (NZD) could continue to weaken, but any decline is likely limited to a test of 0.5585. In the longer run, given the sharp increase in downward momentum, NZD is likely to weaken to 0.5585, potentially 0.5565, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD/USD might continue to weaken

24-HOUR VIEW: "We stated yesterday that NZD 'appears to have entered a sideways-trading phase between 0.5640 and 0.5680'. Our view was incorrect, as NZD plummeted to a low of 0.5591. NZD could continue to weaken, but deeply oversold conditions suggest any decline is likely limited to a test of 0.5585. The major support at 0.5565 is not expected to come under threat. Resistance levels are at 0.5625 and 0.5640."

1-3 WEEKS VIEW: "We have expected NZD to 'trade in a range between 0.5605 and 0.5695' since early last week. NZD traded within the range until yesterday, when, in a sudden move, it plunged to a low of 0.5591. 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."