Can potentially break below 0.6750 – UOB Group

Instead of continuing to decline, the Australian Dollar (AUD) is more likely to trade in a sideways range between 0.6785 and 0.6825. In the longer run, momentum has increased; AUD is likely to decline further, potentially breaking below 0.6750, UOB Group FX analysts Quek Ser Leang and Peter Chia note.  

AUD is likely to decline further

24-HOUR VIEW: “While we expected AUD to continue to weaken last Friday, we indicated that it “it does not seem to have enough momentum to break clearly below the major support at 0.6820.” However, AUD fell more than expected, plummeting to a low of 0.6786. Despite the relatively sharp drop, there has been no significant increase in downward momentum. Today, instead of continuing to decline, AUD is more likely to trade in sideways, probably between 0.6785 and 0.6825.”

1-3 WEEKS VIEW: “Last Wednesday (02 Oct, spot at 0.6880), we highlighted that AUD “has likely entered a range trading phase, and it is expected to trade between 0.6820 and 0.6935 for the time being.” After AUD fell 0.6830, we indicated last Friday (04 Oct, spot at 0.6850) that “there has been a slight increase in downward momentum, and the risk of AUD breaking below 0.6820 has also increased.” We added, “to maintain the current tentative buildup in momentum, AUD must remain below 0.6905 in the next few days.” In NY trade, AUD not only broke below 0.6820, but also another support level at 0.6795, reaching a low of 0.6786. The further increase in momentum suggests AUD is likely to decline further, potentially breaking below 0.6750. On the upside, the ‘strong resistance’ level has moved lower to 0.6855 from 0.6905.”