New Zealand Dollar (NZD) could decline further, but it remains to be seen if it can break below the next support at 0.5730. In the longer run, the outlook for NZD remains negative; the next level to watch is 0.5730, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Outlook for NZD remains negative

24-HOUR VIEW: "NZD plunged to a low of 0.5807 two days ago. In the early Asian session yesterday, we were of the view that NZD 'could drop below the major support at 0.5800, but it might not be able to hold below this level.' We also pointed out that 'the next major support at 0.5775 is unlikely to come into view for now.' We were correct on the first count, but not the second, as NZD plunged to a low of 0.5759. While strong downward momentum continues to suggest further declines, given the deeply oversold conditions, it remains to be seen if NZD can break below the next support at 0.5730. To sustain the oversold momentum, NZD must hold below 0.5800, with minor resistance at 0.5785."

1-3 WEEKS VIEW: "We have expected NZD to trade with a downward bias since last Friday (see annotations in the chart below). After NZD dropped to a low of 0.5807, we indicated yesterday (25 Sep, spot at 0.5815) that 'the price action not only indicates that NZD could break below 0.5800, but also it may test the next major support at 0.5775.' However, we did not expect NZD to drop below 0.5775 so soon, as it plunged to a low of 0.5759 in the NY session. The outlook for NZD remains negative as long as 0.5830 (‘strong resistance’ level was at 0.5865 yesterday) is not breached. The next level to watch on the downside is 0.5730."