AUD/USD: A breach of 0.7005 looks unlikely – UOB

AUD/USD faces further downside but a move to levels below 0.7005 appears unlikely for the time being, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “Our expectation that ‘there is room for AUD to move to 0.7045 first before the current weakness should stabilize’ did not materialize as AUD traded in a quiet manner and within a relatively narrow range between 0.7071 and 0.7100. The underlying tone has firmed and the bias for today is titled to the upside. That said, any advance is likely limited to a test 0.7135 (next resistance is at 0.7165). Support is at 0.7075 followed by 0.7050.”

Next 1-3 weeks: “The sudden and sharp drop in AUD yesterday that hit a low of 0.7057 came as a surprise (we were expecting AUD to trade within a broad range of 0.7080/0.7230). The rapid improvement in downward momentum indicates that AUD could weaken further even though the odds for a break of last month’s low near 0.7005 are not high. Overall, AUD is expected to trade on its back foot unless it can move above the ‘strong resistance’ level of 0.7165.”