The Australian Dollar (AUD) could continue to rebound; any advance is unlikely to reach 0.6600. AUD weakness from late last month has stabilised; it is likely to trade in a 0.6400/0.6600 range for the time being, UOB Group FX strategists Quek Ser Leang and Lee Sue Ann note.
Bears may strive to push towards 0.6475
24-HOUR VIEW: “Yesterday, we indicated that AUD ‘is likely to edge lower, possibly dropping below last week’s low of 0.6480.’ We also indicated that ‘the significant support at 0.6425 is highly unlikely to come under threat.’ We were correct on the first count, but incorrect on the second. AUD plunged sharply, but briefly to 0.6349 before rebounding sharply. AUD then closed at 0.6497 (-0.23%). Today, AUD could continue to rebound, but any advance is unlikely to reach 0.6600 (there is another resistance level at 0.6550). Support levels are at 0.6475 and 0.6445.”
1-3 WEEKS VIEW: “We have held a negative AUD view since late last month. As we tracked the decline, in our most recent narrative from last Friday (02 Aug, spot at 0.6490), we indicated that ‘while AUD could continue to weaken, it is unclear if it has enough momentum to break the significant support at 0.6425.’ Yesterday, AUD broke below 0.6425, reaching a low of 0.6349 before snapping back up. The sharp bounce from the low suggests AUD is unlikely to weaken further. In other words, the AUD weakness has likely stabilised. From here, we hold a neutral view on AUD. Given the recent volatility, it could trade in a relatively broad range of 0.6400/0.6600 for the time being.”
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