AUD/USD: To retest the 0.6400 level before stabilization – UOB Group
|The weakness in the Australian Dollar (AUD) could retest the 0.6400 level before stabilization is likely. In the longer run, risk for AUD has shifted to the downside; the 0.6380 level is expected to provide significant support, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.
Risk for AUD has shifted to the downside
24-HOUR VIEW: “When AUD was at 0.6480 yesterday, we noted that ‘the underlying tone still appears to be a bit soft, and there is room for AUD to test 0.6440.’ We pointed out, ‘a clear break below this level still seems unlikely.’ We did not expect AUD to plummet to a low of 0.6399. Not surprisingly, conditions are oversold. However, with no signs of stabilisation just yet, AUD could retest the 0.6400 level. This time around, a clear break below this level seems unlikely. The next support at 0.6380 is not expected to come into view. To keep the oversold momentum going, AUD must remain below 0.6460, with minor resistance at 0.6445.”
1-3 WEEKS VIEW: “In our most recent narrative from last Thursday (28 Nov, spot at 0.6495), we highlighted that “the current price movements are likely part of a consolidation phase.” We expected AUD to ‘consolidate between 0.6440 and 0.6550 for the time being.’ Yesterday, in a sudden move, AUD plunged to 0.6399 before closing at 0.6430 (-0.88%). Although the rapid increase in momentum suggests the risk has shifted to the downside, any decline is expected to face significant support at 0.6380. To sustain the increase in momentum, AUD must not break above the ‘strong resistance’ level, currently at 0.6490.”
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