AUD/USD: Room for a drop to the 0.7060 level – UOB

AUD/USD is losing momentum and could slip back to the 0.7060 region in the next weeks, suggested FX Strategists at UOB Group.

Key Quotes

24-hour view: “We expected AUD to weaken yesterday but held the view that ‘0.7150 is unlikely to come into the picture’. AUD subsequently dropped to an overnight low of 0.7155 before extending its decline after opening this morning. The ease by which AUD took out 0.7150 and the accompanying strong downward momentum indicates that AUD could weaken further but the major support at 0.7060 is unlikely to come into the picture for now (there is a relatively strong level at 0.7110). Resistance is at 0.7160 followed by 0.7200.”

Next 1-3 weeks: “While we highlighted yesterday that the risk for AUD ‘has shifted to the downside’, we held the view that ‘any weakness could be relatively limited unless AUD can break 0.7150’. The ease by which AUD cracked 0.7150 earlier this morning came as a surprise and the rapid surge in downward momentum indicates that AUD could weaken further towards 0.7060. All in, the current negative outlook for AUD is deemed as intact as long as AUD does not move above 0.7250 (‘strong resistance’ level was 0.7305 yesterday).”