AUD/USD risks further downside below 0.7100 – UOB

FXStreet reports that AUD/USD could have charted a near-term peak if it breaks below the 0.7100 mark, in opinion of FX Strategists at UOB Group.

24-hour view: “Last Friday, AUD rose to a fresh high of 0.7227 before staging a sharp sell-off to close lower by -0.74% (0.7143), its biggest 1-day decline in more than 5 weeks. Downward momentum has ticked up and from here; AUD could dip below the ‘strong support’ at 0.7100 but for today, a sustained decline below this level is unlikely (next support is at 0.7075). Resistance is at 0.7155 but only a move above 0.7180 would indicate the current build-up in downward momentum has dissipated.”

Next 1-3 weeks: “While we have held a positive view in AUD since mid-July, in our latest update from last Thursday (30 Jul, spot at 0.7175), we indicated that ‘UD could edge above 0.7200 but in view of the lackluster momentum, it will probably struggle to extend its gain towards 0.7235’. AUD subsequently rose to 0.7227 on Friday before dropping back down sharply. Upward momentum has deteriorated further and from here, a breach of 0.7100 (no change in ‘strong support’ level) would indicate that 0.7227 is a short-term top. Overall, unless AUD moves and stays above 0.7180 within these 1 to 2 days, a breach of 0.7100 would not be surprising.”