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In opinion of FX Strategists at UOB Group, AUD/USD could extend the drop to the 0.6970 region in the next weeks.

Key Quotes

24-hour view: “Last Friday, we highlighted that AUD ‘could edge downwards but any weakness is viewed as a lower trading range of 0.7010/0.7085’. We added, ‘a sustained decline below 0.7010 is unlikely’. Our view was not wrong as AUD dropped to a low of 0.7006 before recovering. The combination of oversold conditions and waning momentum suggests further AUD weakness is unlikely. For today, AUD is more likely to consolidate, likely not straying much out of Friday’s range of 0.7006/0.7087.”

Next 1-3 weeks: “We first turned negative AUD on. Yesterday (24 Sep, spot at 0.7075), we noted that 0.7030 is a solid support and ‘a break of this level could potentially trigger further rapid decline’. AUD subsequently cracked 0.7030 but it rebounded after touching a low of 0.7016. Slowing shorter-term momentum could lead to a couple of days of consolidation first. As long as the ‘strong resistance’ at 0.7180 is intact (no change in level from yesterday), the current negative phase still appears to have room to run. The next support is at 0.6970.”