AUD/USD could attempt some consolidation ahead of a potential move to the mid-0.7400s, suggested FX Strategists at UOB Group.
Key Quotes
24-hour view: “We underestimated the downward momentum in AUD as it plummeted to 0.7478 (we were of the view that 0.7500 is unlikely to come under threat). The decline appears to be overdone and AUD is unlikely to weaken further. For today, AUD is more likely to trade between 0.7475 and 0.7555.”
Next 1-3 weeks: “Last Friday (18 Jun, spot at 0.7555), we indicated that ‘strong downward momentum indicates that AUD is likely to weaken further’. We added, ‘the next level to focus on is at 0.7500 and a break of 0.7500 would open up the way for a move to 0.7450’. While our view was not wrong, we did not anticipate the rapid pace of decline as AUD plunged to 0.7478 during NY session. The level to focus on is at 0.7450 even though deeply oversold shorter-term conditions could lead to a couple of days of consolidation first. On the upside, a break of 0.7600 (‘strong resistance’ level was at 0.7625 last Friday) would indicate that the downside risk that started earlier last week has run its course.”
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