According to FX Strategists at UOB Group, the pair is seen sidelined in the lower end of the recent range.
Key Quotes
24-hour view: “We highlighted yesterday, “despite the lackluster upward momentum, the current short-term strength has room to extend higher to 0.7140″. However, AUD only managed to touch a high of 0.7130 before staging a surprisingly swift and sharp decline (overnight low of 0.7044). The rapid drop appears to be running ahead of itself but there is scope for a dip below 0.7040 first before the current weak phase in AUD should stabilized. In other words, the odds for further weakness to the next support at 0.7020 is not high (this level is followed by the round-number support of 0.7000). On the upside, only a break above 0.7110 would indicate that the current downward pressure has eased (minor resistance is at 0.7090)”.
Next 1-3 weeks: “AUD touched a 1-week high of 0.7130 during Asian hours yesterday before staging a surprisingly sharp and rapid drop. We highlighted yesterday that the ‘negative’ phase has ended and while the subsequent decline moved below our expected 0.7050/0.7210 consolidation range (overnight low of 0.7045), we are not convinced that the current AUD weakness can be sustained. Only a clear break of 0.7000 would indicate that AUD is ready to move lower in a sustained manner. Meanwhile, we expect AUD to trade sideways, albeit likely at lower 0.7020/0.7140 range”.
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