FX Strategists at UOB Group noted the pair reached the oversold area, while a break above 0.7455 will be indicative that a short-term low is in place.
Key Quotes
24-hour view: “We highlighted yesterday that “a dip below 0.7345/50 is not ruled out but any weakness is unlikely to be sustained”. AUD subsequently touched a low of 0.7346 before recovering quickly. The recent mild downward pressure has eased and the current movement is viewed as part of a consolidation phase. In other words, AUD is expected to trade sideways for today, likely within a 0.7355/0.7415 range”.
Next 1-3 weeks: “As highlighted yesterday, while the outlook for AUD is bearish, the decline that started last week is already approaching oversold levels. However, further weakness is not ruled but at this stage, we are seeing strong support at 0.7330 followed by 0.7300. In view of the oversold conditions, any weakness is expected to be slow and grinding and the two levels mentioned earlier are expected to offer solid support. In other words, we do not expect AUD to ‘accelerate’ lower. On the upside, only a break of the ‘stop-loss’ at 0.7455 (level previously at 0.7490) would indicate that a short-term low is in place”.
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