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FX Strategists at UOB Group noted a close below 0.6730 should pave the way for further decline to the 0.6678 area.

Key Quotes

24-hour view: “Our view from last Friday was that “improved downward momentum could lead to AUD probing the 0.6730 support but a sustained decline is unlikely”. While the expectation was not wrong as AUD recovered after touching 0.6736, the opening gap lower this morning has resulted in further improvement in momentum and AUD could test the month-to-date low at 0.6678 (next support is at 0.6650). Last Friday’s closing level of 0.6755 is acting as a solid resistance now (minor resistance at 0.6730)”.

Next 1-3 weeks: “The recent quiet and prolonged consolidation phase ended abruptly as AUD crashed below the bottom of our expected 0.6730/0.6845 range upon opening this morning. We indicated since last Thursday (22 Aug, spot at 0.6775), “unless AUD register a daily closing out of the expected 0.6730/0.6845 range, it could continue to trade sideways for a while more”. In other words, if AUD were to close below 0.6730 in NY, it would suggest further weakness to 0.6640. All in, the current downward pressure is expected to remain intact unless AUD can move back above the strong resistance at 0.6785″.