AUD/USD: The major support at 0.6590 is set to be breached

The Australian Dollar (AUD) could dip below the major support at 0.6590 but is unlikely to be able to maintain a foothold below this level. Note that below 0.6590, there is another major support at 0.6570, UOB Group FX analysts Quek Ser Leang and Lee Sue Ann.

A breach below 0.6590 leads to 0.6570

24-HOUR VIEW: “Two days ago, AUD fell sharply. Yesterday, we indicated that ‘while the decline appears to be overdone, the weakness in AUD could extend to 0.6620 before stabilisation can be expected.’ We added, ‘the major support at 0.6590 is unlikely to come under threat.’ AUD subsequently fell more than expected to 0.6612. Conditions are severely oversold, but as long as 0.6645 (minor resistance is at 0.6630) is not breached, AUD could dip below the major support at 0.6590. In view of the oversold conditions, it is unlikely to be able to maintain a foothold below this level.”

1-3 WEEKS VIEW: “We have held a negative view in AUD since the middle of last week (as annotated in the chart below). Yesterday (23 Jul, spot at 0.6645), we highlighted that ‘further AUD weakness is not ruled out, but given that conditions are approaching oversold levels, the pace of any further decline is likely to be slower.’ We pointed out that ‘the levels to watch are 0.6620 and 0.6590.’ AUD then broke below 0.6620 (low of 0.6612) before closing lower for the seven straight days (0.6616, -0.41%). While we continue to hold a negative view, conditions are severely oversold, and AUD does not seem to have the potential to decline significantly from here. Note that below 0.6590, there is another major support at 0.6570. On the upside, a breach of 0.6675 (‘strong resistance’ level was at 0.6705 yesterday) would suggest the weakness in AUD has stabilised.”

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