AUD/USD: The next level to watch is 0.6700 – UOB Group
|Weakness in Australian Dollar (AUD) has not stabilised; any further decline is likely part of a lower trading range of 0.6735/0.6785. In the longer run, AUD is expected to continue to weaken, albeit likely at a slower pace. The next level to watch is 0.6700, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Weakness in AUD has not stabilised
24-HOUR VIEW: “Our view of sideways trading yesterday was incorrect. Instead of trading sideways, AUD fell sharply to 0.6744, before closing at 0.6759 (-0.51%). While the weakness has not stabilised, severely oversold conditions suggest any further decline is likely part of a lower trading range of 0.6735/0.6785. A sustained break below 0.6735 appears unlikely, and the major support at 0.6700 is also unlikely to come into view.”
1-3 WEEKS VIEW: “When AUD was trading at 0.6850 last Friday (04 Oct), we indicated that “there has been a slight increase in downward momentum, and the risk of AUD breaking below 0.6820 has also increased.” After AUD dropped below 0.6820, we indicated yesterday (07 Oct, spot at 0.6800) that “momentum has increased, and AUD is likely to decline further, potentially breaking below 0.6750.” AUD then broke below 0.6750 in NY trade, reaching a low of 0.6744. We continue to expect AUD to weaken, even though oversold short-term conditions could slow the pace of any further decline. The next level to watch is 0.6700. We will continue to view AUD negatively, as long as 0.6825 (‘strong resistance’ level was at 0.6855 yesterday) is not breached.”
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