In the opinion of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, AUD/USD is now likely to navigate within the 0.6630-0.6780 range in the next few weeks.
Key Quotes
24-hour view: “Yesterday, we highlighted that ‘while upside momentum has not improved much, AUD could retest 0.6820 level before a more sustained pullback’. However, instead of retesting 0.6820, the AUD plunged by 1.13% (0.6702), its biggest 1-day decline since early March. Not surprisingly, the oversized drop sells more. That said, weakness has not stabilized and barring a break above 0.6745 (minor resistance at 0.6725), the AUD could fall further to 0.6670 before stabilization is likely. Major support at 0.6635 is not expected to come under threat.”
Next 1-3 Weeks: “We have maintained a positive AUD view since last Wednesday, May 03 (see annotation on chart below). After the AUD rose to 0.6818 and bounced back, we highlighted yesterday (May 11, spot at 0.6780) that ‘while the outlook for the AUD is still positive, it remains to be seen whether it has enough momentum to advance to the next target of 0.6860 ‘ . We did not expect a sharp move as the AUD fell below our ‘firm support’ level of 0.6720 in NY trade (lower than 0.6689). A breach of 0.6720 indicates that AUD strength is over. Despite the sharp fall, it is too early to expect a big move in the AUD. For now, the bias is tilted to the downside but we see any AUD weakness as part of the 0.6630/0.6780 range. In other words, a sustained drop below 0.6630 is unlikely for now.”
