AUD/USD stays neutral, a test of 0.70 lost traction – UOB

In opinion of FX Strategists at UON Group, the prospect of a decline to 0.70 in the pair appears to have run out of steam for the time being.

Key Quotes

24-hour view: “Expectation for AUD to trade sideways last Friday was wrong. AUD dropped initially to 0.7021 before staging a strong and sharp rebound to end slightly higher (NY close of 0.7087, +0.11%). The rapid swing has resulted in an unclear outlook even though the robust rebound has scope to test the 0.7120 resistance. The next resistance at 0.7140 is unlikely to come into the picture. Support is at 0.7075 followed by 0.7050. The 0.7021 low is not expected to be threatened, at least not for today”.

Next 1-3 weeks: “AUD staged a brief decline last Friday and rebounded strongly from a low of 0.7021 to close higher for the day (NY close of 0.7087, +0.11%). After several days of ‘quiet’ price action, the sudden burst in volatility came as a surprise. In recent updates, we expected AUD “to trade with a slight downward bias” and were of the view that a break of the 0.7041 year-to-date low would shift the focus to 0.7000. This scenario is still intact but after last Friday’s price action, the prospect for a move to 0.7000 is not high. Meanwhile, the bias is still on the downside and only break of 0.7140 would suggest the current mild downward pressure has eased”.