AUD/USD: Further downside remains on the cards – UOB

In the opinion of FX Strategists at UOB Group Quek Ser Leang and Peter Chia, AUD/USD could recede further and revisit the 0.6815 level in the near term.

Key Quotes

24-hour view: “Last Friday, we highlighted that ‘the risk for AUD is still on the upside but any advance is expected to face solid resistance at 0.7005’. AUD rose to a high of 0.7009 during NY hours before plunging to close at 0.6892 (-1.28%). AUD extended its decline during early Asian hours. Strong downward momentum suggests AUD could drop below last week’s low near 0.6855. For today, the next support at 0.6815 is unlikely to come into the picture. Resistance is at 0.6895 followed by 0.6915.”

Next 1-3 weeks: “We highlighted last Friday (26 Aug, spot at 0.6960) that shorter-term momentum is beginning to build and the chance for AUD to move clearly above 0.7005 has increased. AUD popped briefly above 0.7005 (high of 0.7009) during early NY hours before staging a sharp selloff. The sell-off extended during early Asian and the risk from here is for AUD to weaken towards 0.6815. Resistance is at 0.6915 but only a break of 0.6945 (‘strong resistance’ level) would indicate that the downside risk has dissipated.”