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Further pullbacks in AUD/USD are likely as long as it keeps the trade below the 0.7680 level in the short-term horizon, noted UOB Group’s FX Strategists.

Key Quotes

24-hour view: “We highlighted yesterday that ‘oversold conditions suggest AUD is unlikely to weaken much further’ and we expected AUD to ‘consolidate and trade between 0.7570 and 0.7630’. AUD subsequently traded within a 0.7564/0.7614 range. The movement is still viewed as part of a consolidation phase and AUD is likely to continue to trade sideways. Expected range for today, 0.7575/0.7625.”

Next 1-3 weeks: “We turned negative on AUD earlier this week. In our latest narrative from yesterday (25 Mar, spot at 0.7595), we indicated that ‘the current weak phase is deemed intact as long as AUD does not move above 0.7680 (‘strong resistance’ level)’. While there is no change in our view for now, oversold shorter-term conditions could lead to a couple of days of consolidation first. Looking ahead, a break of 0.7560 (note that AUD dropped to 0.7564 during NY hours) would shift the focus to 0.7510.”