UOB Group’s FX Strategists noted that further downside momentum in AUD/USD now appears mitigated.
24-hour view: “Last Friday, we highlighted that ‘there is scope for the sharp drop in AUD to extend but a sustained decline below 0.7400 is unlikely’. AUD subsequently dropped to 0.7410 before staging a surprisingly sharp and swift rebound to 0.7495. The rapid rebound appears to be overdone and AUD is unlikely to advance much further. For today, AUD is more likely to trade between 0.7450 and 0.7500.”
Next 1-3 weeks: “We highlighted last Friday (09 Jul, spot at 0.7430) that ‘risk for AUD is clearly on the downside’ and that ‘support levels are at 0.7400 and 0.7365’. AUD subsequently dropped to 0.7410 before rebounding sharply to 0.7495. While our ‘strong resistance’ level at 0.7500 is still intact, downward momentum has waned considerably and the prospect for AUD to break 0.7400 has diminished. In order to rejuvenate the flagging downward momentum, AUD has to move and stay below 0.7450 within these 1 to 2 days or a break of 0.7500 would not be surprising.”
