According to FX Strategists at UOB Group, the Aussie Dollar could slip back to the 0.7300 handle in the next weeks.
Key Quotes
24-hour view: “While we expected a lower AUD yesterday, the rapid decline that took out the strong 0.7380 support was not exactly anticipated. The pressure is still clearly on the downside but oversold conditions suggest a slower pace of decline and any weakness could be limited to the next support at 0.7330 (0.7350 is already quite a strong support). Resistance is at 0.7390 followed by 0.7415. The latter level is acting as a very strong resistance level now and at this stage, is expected to be strong enough to cap any intraday rebound”.
Next 1-3 weeks: “We highlighted yesterday that the “upward pressure has eased” and AUD has likely moved into a consolidation phase. The subsequent outsized decline that hit an overnight low of 0.7364 came as a surprise. This level is just above our expected 0.7350/0.7480 consolidation range and in view of the rapid pace of decline; a move below 0.7350 would not be surprising. That said, we are not convinced that the current weakness is the start of a fresh bearish phase even though the current soft patch could extend lower and test the major 0.7300 support. On the upside, only a move above 0.7440 would indicate that the current weakness has stabilized”.
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