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FX Strategists at UOB Group noted the pair could tumble further and visit the critical support in the 0.7000 area.

Key Quotes

24-hour view: “While AUD tested the 0.7060 support as expected, the anticipated recovery did not materialize as AUD extended its weakness and a low of 0.7042. The current weakness appears to be struggling to maintain its momentum but it is too soon to expect a sustained recovery. From here, we expect AUD to continue to edge lower but any weakness is viewed as part of a 0.7035/0.7085 range. In other words, while AUD is expected to make fresh lows, we do not expect an ‘acceleration’ lower from here”.

Next 1-3 weeks: “We indicated last Thursday (04 Oct, spot at 0.7100) that “AUD is under pressure” and added the “the major 0.7030 support could be out or reach”. The pace of the anticipated weakness in AUD exceeded our expectation but extreme oversold indicators continue to suggest that the current AUD weakness may not be sustainable. That said, there is scope for a test of the next support at 0.7000 and we would likely upgrade the current ‘negative’ outlook for AUD to ‘bearish’ upon a clear break below this level. Meanwhile, AUD is expected to stay under pressure unless it can break above the 0.7110 ‘key resistance’ (level previously at 0.7175)”.