AUD/USD risks extra pullbacks – UOB

In the opinion of FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang, further weakness remains in the pipeline for AUD/USD in the next few weeks.

Key Quotes

24-hour view: “We highlighted yesterday that AUD ‘could edge lower from here but is unlikely to threaten the major support at 0.6700’. The subsequent weakness exceeded our expectations as AUD plummeted briefly to 0.6683 before rebounding strongly. Oversold conditions coupled with early signs of slowing momentum suggest AUD is unlikely to weaken much further. For today, AUD is more likely to trade between 0.6700 and 0.6780.”

Next 1-3 weeks: “On Tuesday (12 Jul, spot at 0.6740), we held the view that AUD could drop below 0.6700 but the chance for a break of the next support at 0.6650 is not high. Yesterday (14 Jul), AUD cracked 0.6700 and dropped to 0.6683 before rebounding. While downward momentum has improved slightly, the odds for a break of 0.6650 have not increased by much. All in, only a break of 0.6815 (‘strong resistance’ level was at 0.6835 yesterday) would indicate that the downside risk has dissipated. Looking ahead, if there is a clear break of 0.6650, the next level to monitor is at 0.6600.”