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In opinion of FX Strategists at UOB Group, the outlook for AUD/USD is expected to remain negative for the next weeks.

Key Quotes

24-hour view: “While we expected AUD to weaken yesterday, we held the view that ‘lackluster momentum suggests that 0.7590 is unlikely come under threat’. We did not anticipate the surge in momentum that sent AUD plunging to 0.7564. The decline was however, short-lived, as AUD rebounded sharply. The sharp rebound coupled with oversold conditions suggests that AUD has scope to move higher form here but any advance is likely limited to a test of 0.7635. Support is at 0.7585 followed by the solid level at 0.7560.”

Next 1-3 weeks: “Last Thursday (28 Jan, spot at 0.7635), we highlighted that ‘risk has shifted quickly to the downside’ and we held the view that AUD ‘is likely to trade with a downward bias towards 0.7560’. AUD plunged to 0.7564 yesterday (02 Feb) before rebounding sharply to end the day at 0.7608 (-0.18%). Further weakness is not ruled out but oversold shorter-term conditions suggest that 0.7560 may not break so soon. Overall, the current negative outlook for AUD is deemed intact as long as AUD does not move above 0.7685 (‘strong resistance’ level was previously at 0.7730). Looking ahead, the next support below 0.7560 is at 0.7520.”