NZD/USD might not be able to reach 0.5940 - UOB Group

New Zealand Dollar (NZD) could decline further against US Dollar (USD), but it might not be able to reach 0.5940. In the longer run, upward momentum has faded; tentative increase in downward momentum may lead to NZD declining to 0.5940, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Upward momentum has faded

24-HOUR VIEW: "We did not expect NZD to drop to a low of 0.5967 (we were expecting range trading). While deeply oversold, the weakness has not stabilised. Today, NZD could decline further, but oversold conditions suggest it might not be able to reach 0.5940. On the upside, resistance levels are at 0.5985 and 0.6005."

1-3 WEEKS VIEW: "After holding a positive NZD view since the middle of last week, we pointed out yesterday (28 Jul, spot at 0.6020) that 'upward momentum is beginning to slow, and the odds of NZD rising to 0.6080 are diminishing.' While our shift in tone was timely, we did not expect the sharp drop to 0.5967. The breach of our 'strong support' level at 0.5985 indicates that upward momentum has faded. There has been a tentative increase in downward momentum, and this may lead to NZD declining to 0.5940. Currently, it is too early to determine if NZD can reach 0.5905. The downward bias is intact as long as NZD holds below the 'strong resistance' level, now at 0.6030."