There is scope for New Zealand Dollar (NZD) to test 0.5665; a clear break above this level is unlikely. In the longer run, weakness in NZD has stabilized; for the time being, it is likely to trade in a range between 0.5605 and 0.5695, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Weakness in NZD has stabilized

24-HOUR VIEW: "NZD dropped to a low of 0.5607 last Friday and then rebounded. Yesterday, we pointed out that 'the rebound amid slowing momentum and oversold conditions suggests that instead of declining today, NZD is more likely to trade in a range, probably between 0.5610 and 0.5645'. NZD subsequently traded within a higher range of 0.5620/0.5651 before closing at 0.5647 (+0.35%). Upward momentum is starting to build, but it is not sufficient to indicate a sustained rise just yet. That said, there is scope for NZD to test 0.5665. We do not expect a clear break above this level, and we also do not expect the next resistance at 0.5695 to come under threat. Support levels are at 0.5630 and 0.5620."

1-3 WEEKS VIEW: "Last Wednesday (05 Nov, spot at 0.5645), we highlighted that 'downward pressure has increased, and NZD could weaken to 0.5600 next'. After NZD dropped to a low of 0.5607 on Friday and then rebounded, we highlighted the following yesterday (10 Nov, spot at 0.5630): 'The new low was accompanied by a positive divergence on momentum indicators, suggesting waning downside momentum. Unless NZD can break below 0.5600 within these one to two days, a breach of the ‘strong resistance’ at 0.5660 (level was previously at 0.5680) would mean that the weakness in NZD from late last month has stabilized'. NZD then rose to a high of 0.5651. Although our ‘strong resistance’ level at 0.5660 has not been breached yet, downward momentum has largely faded. As stated yesterday, the weakness in NZD has stabilized, and for the time being, we expect it to trade in a range between 0.5605 and 0.5695."