In opinion of FX Strategists at UOB Group, AUD/USD risks a deeper pullback if 0.7680 is cleared in the next weeks.
24-hour view: “Our expectation for AUD to ‘trade sideways’ last Friday was wrong as it dropped sharply to 0.7678 before rebounding quickly. Further AUD weakness appears unlikely. For today, AUD is more likely to trade within a 0.7690/0.7745 range.”
Next 1-3 weeks: “We have held the view that AUD is in a 0.7680/0.7830 consolidation phase for more than a week. In our latest narrative from last Thursday (27 May, spot at 0.7725), we highlighted that ‘shorter-term downward momentum is beginning to improve and the chance for a break of 0.7680 has increased’. AUD dropped to 0.7678 on Friday before rebounding quickly. The downside risk has increased further but AUD has to close below 0.7680 before a sustained decline can be expected. Looking ahead, the next support below 0.7680 is at 0.7650. At this stage, the prospect for a sustained decline is not high but it would remain intact unless AUD breaks the ‘strong resistance’ level at 0.7770 within these few days.”
