Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group suggest AUD/USD could revisit the 0.6575 level while below 0.6630.
Key Quotes
24-hour view: “Last Friday, we highlighted that ‘barring a break above 0.6745, the AUD could fall further to 0.6670 before stabilizing’. We added, ‘Key support at 0.6630 is not expected to come under threat’. AUD fell more than expected as it came close to breaking 0.6630 (down to 0.6637). Today, the AUD dip may break 0.6630 but given the severely oversold conditions, it is not expected to challenge the key support at 0.6575. On the downside, a breach of 0.6695 (minimum resistance at 0.6675) suggests the AUD is not weakening further.”
Next 1-3 Weeks: “We signaled last Friday (May 15, spot at 0.6705) that the recent AUD strength was over. We highlighted that ‘for now, the bias is tilted to the negative but we see any AUD weakness as part of the 0.6630/0.6780 range’ and ‘a sustained drop below 0.6630 is now unlikely’. We did not expect a sharp drop in the AUD as it fell near 0.6630 (down from 0.6637). From here, the AUD should stay below 0.6630 and a sustained decline to 0.6575 is likely. The possibility of a clear break below 0.6630 for the AUD remains intact until it remains below 0.6725 (now the ‘strong resistance level’).
