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In opinion of FX Strategists at UOB Group, AUD/USD could slip back to the mid-0.7000s in the next weeks.

Key Quotes

24-hour view: “We expected AUD to trade with an upside bias yesterday but held the view that ‘a sustained advance above 0.7230 appears unlikely’. While AUD rose to a high of 0.7209, the subsequent sharp sell-off came during NY hours came as a surprise (low of 0.7101). The oversized decline appears to be ‘overdone’ and while AUD could dip below 0.7100, any weakness is viewed as a lower trading range of 0.7075/0.7145. In other words, a sustained decline below 0.7075 is not expected.”

Next 1-3 weeks: “Yesterday (06 Oct, spot at 0.7190), we noted that ‘upward momentum has improved a tad’ but we were of the view that AUD ‘has to close above 0.7230 before a sustained advance can be expected’. The subsequent sharp sell-off was unexpected as AUD cracked several strong support levels with ease (low of 0.7101). The rapid improvement in downward momentum suggests the risk is tilted to the downside. From here, barring a move above 0.7185 (‘strong resistance’ level), AUD could weaken to 0.7050 but odds for a move to last month’s low at 0.7006 are not high for now.”