Current price movements are likely part of a consolidation phase – UOB Group

Australian Dollar (AUD) is likely to trade in a range between 0.6400 and 0.6480. In the longer run, current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500, UOB Group’s FX analysts Quek Ser Leang and Lee Sue Ann note.

AUD/USD expected to be in a range of 0.6375/0.6500

24-HOUR VIEW: “Following AUD sharp decline to 0.6373 last Friday, we pointed out yesterday that ‘the sharp drop appears to be excessive.’ However, we were of the view that ‘there is scope for AUD to retest last Friday’s low near 0.6375 before a stabilisation can be expected.’ AUD then dipped to 0.6380 before rebounding strongly to a high of 0.6471. It then eased off to close at 0.6441 (+0.80%). This time around, the sharp rebound appears to be excessive, and AUD is unlikely to rise much further. Today, AUD is more likely to trade in a range, probably between 0.6400 and 0.6480.”

1-3 WEEKS VIEW: “We turned negative in AUD late last week. After AUD plummeted to 0.6373, we indicated yesterday (09 Dec, spot at 0.6400) that “the risk for AUD remains on the downside, likely towards the year-to-date low, near 0.6350.” We did anticipate the sharp bounce that broke above our ‘strong resistance’ level at 0.6450 (high has been 0.6471). In other words, the decline fell short than expected. The current price movements are likely part of a consolidation phase, expected to be in a range of 0.6375/0.6500.”