AUD/USD weakness seems likely – UOB Group

Further Australian Dollar (AUD) weakness seems likely; oversold conditions suggest any decline may not reach 0.6520 today. In the longer run, AUD is expected to continue to decline, likely toward the late-September low, near 0.6520, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note.

Any decline may not reach 0.6520 today

24-HOUR VIEW: “We stated yesterday that ‘the current price movements are likely part of a sideways trading phase, most likely between 0.6570 and 0.6605.’ AUD subsequently rose to a high of 0.6612, and then, in a sudden move, plunged to a low of 0.6540. While further AUD weakness seems likely, oversold conditions suggest any decline may not reach the major support at 0.6520 today. Note that the 0.6540 level is also expected to provide support. To sustain the oversold momentum, AUD must not break above 0.6595, with minor resistance at 0.6575.”

1-3 WEEKS VIEW: “On Monday (06 Oct, spot at 0.6595), we indicated that AUD ‘remains neutral but is now expected to trade in a narrower range of 0.6555/0.6540.’ In our latest narrative from Wednesday (08 Oct, spot at 0.6580), we stated that ‘downward momentum is starting to build, and the odds of AUD breaking below 0.6555 are increasing and will continue to increase as long as the ‘strong resistance’ level, now at 0.6630, holds.’ Our view turned out to be correct, as AUD broke below 0.6555 yesterday, reaching a low of 0.6540. Downward momentum has improved further, and we continue to expect AUD to decline, likely toward the late-September low, near 0.6520. On the upside, the ‘strong resistance’ is now at 0.6615 instead of 0.6630.”