AUD/USD now points to some consolidation – UOB

In light of the recent price action, AUD/USD is expected to trade within the 0.7320-0.7460 range in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Yesterday, we expected AUD to ‘consolidate and trade between 0.7410 and 0.7470’. AUD subsequently popped to a high of 0.7469 before staging a surprisingly sharp sell-off to a low of 0.7375 in NY. The rapid decline appears to be overdone and while there is scope for AUD to test 0.7365, a sustained decline below this level is unlikely (the next support at 0.7320 is not expected to come into the picture). On the upside, a breach of 0.7430 (minor resistance is at 0.7415) would indicate that the current weakness has stabilized.”

Next 1-3 weeks: “We turned positive in AUD about 2. In our latest narrative from Monday (06 Sep, spot at 0.7435), we indicated that overbought shorter-term conditions could lead to a couple of days of consolidation first but AUD is likely to break 0.7480 later on (note that AUD rose to 0.7478 last Friday). Yesterday (07 Sep), AUD popped to a high of 0.7469 before dropping sharply. While our ‘strong support’ level at 0.7365 is still intact (low of 0.7375), upward pressure has more or less dissipated. In other words, the 2-week AUD strength has run its course. The current movement is viewed as part of a consolidation phase and AUD could trade within a 0.7320/0.7460 range for a period of time.”