If the 0.7400 barrier is violated in the near term, the AUD/USD is at risk of a deeper correction, according to UOB Group FX Strategists.
Observation for 24 hours: “Yesterday, we predicted the Australian dollar to ‘move between 0.7450 and 0.7500.’ Following that, the AUD surged to 0.7504 before dropping to 0.7427 in the early New York hours. Despite the fast drop, the downward momentum has not improved significantly, and the Australian dollar is unlikely to weaken any further. Today, the AUD is more likely to trade in the range of 0.7430 to 0.7480.”
Within the next 1-3 weeks: “Since last week, we’ve been expecting the Australian dollar to fall. We stated on Monday that ‘downward momentum has slowed greatly and the chance for AUD to break 0.7400 has lessened’ after the AUD rallied sharply from 0.7410. Yesterday, the Australian dollar surged above our’strong resistance’ mark of 0.7500 (high of 0.7504) before falling again. While the bias remains to the downside, the AUD must close below 0.7400 before a significant loss can be predicted. In the meantime, it may trade in the 0.7400/0.7500 range.”/n
