NZD/USD: The next major support at 0.5845 is unlikely to come into view - Scotiabank

New Zealand Dollar (NZD) is expected to decline further to 0.5845, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD is expected to decline further

24-HOUR VIEW: "We did not expect NZD to drop sharply to a low of 0.5889 yesterday, as we were expecting sideways trading. While conditions are oversold, there is a chance for NZD to test last month's low, near 0.5885, before stabilisation can be expected. A sustained break below this level is unlikely, and the next major support at 0.5845 is also unlikely to come into view. Resistance is at 0.5920; a breach of 0.5935 would indicate that the weakness is stabilising."

1-3 WEEKS VIEW: "Two days ago (29 Jul, spot at 0.5970), we noted that the recent 'upward momentum has faded.' We also pointed out that 'there has been a tentative increase in downward momentum, and this may lead to NZD declining to 0.5940.' We underestimated the strength of the buildup in momentum, as NZD plunged to a low of 0.5889 yesterday. From here, we expect NZD to decline further to 0.5885, potentially reaching 0.5845. The weakness is intact as long as NZD holds below the 'strong resistance' at 0.5960 (level was at 0.6005 yesterday)."