Expected to trade in a range between 0.6725 and 0.6780 – UOB Group

The Australian Dollar (AUD) is expected to trade in a range between 0.6725 and 0.6780. In the longer run, AUD is expected to continue to weaken, albeit likely at a slower pace. The next level to watch is 0.6700, UOB Group Quek Ser Leang and Peter Chia note.

 The next level to watch is 0.6700

24-HOUR VIEW: “After AUD fell sharply two days ago, we indicated yesterday that ‘while the weakness has not stabilised, severely oversold conditions suggest any further decline is likely part of a lower trading range of 0.6735/0.6785.’ We added, ‘a sustained break below 0.6735 appears unlikely, and the major support at 0.6700 is unlikely to come into view.’ AUD subsequently weakened more than expected to 0.6715 before rebounding to close at 0.6747 (-0.17%). Slowing downward momentum combined with oversold conditions suggests that the weakness in AUD has likely stabilised. In other words, AUD is expected to trade in a range today, probably between 0.6725 and 0.6780.”

1-3 WEEKS VIEW: “We indicated yesterday (08 Oct, spot at 0.6755) that AUD is ‘is expected to continue to weaken, albeit at a slower pace.’ We added, ‘the next level to watch is 0.6700.’ AUD then fell to 0.6715 before recovering. Short-term downward momentum has slowed to an extent, but provided that 0.6800 (‘strong resistance’ level was at 0.6825 yesterday) is not breached, there is still a chance for AUD to drop to 0.6700. A breach of the ‘strong resistance’ would mean that the weakness in AUD that started late last week has ended.”