In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, AUD/USD risks a potential breakdown of the 0.6700 support in the short-term horizon.
Key Quotes
24-Hour View: We highlighted last Friday that the AUD “is under mild bearish pressure and could drop below 0.6750.” However, we think that “a sustained decline below this level is unlikely.” AUD weakened more than expected as it closed on a softer note at 0.6732 (-0.70%) before falling to 0.6723. There is room to expand quickly in decline. Given the oversold conditions, a sustained decline below key support at 0.6700 is unlikely. Resistance is at 0.6755, then 0.6775.
Next 1-3 weeks: Our latest narrative was from last Thursday (20 Jul, spot at 0.6775). In the update, we highlighted that “the recent buildup in upward momentum has dissipated” and we expected AUD to trade in a range between 0.6700 and 0.6865. On Friday, AUD fell to a low of 0.6723. Downward momentum is beginning to build and, if AUD breaks below 0.6700, it could continue to weaken to 0.6665. The downward pressure is intact as long as AUD stays below the ‘strong resistance’ level, currently at 0.6800.
