AUD/USD: Dwindling bets for extra pullbacks – UOB

In the view of Economist Lee Sue Ann and Markets Strategist Quek Ser Leang at UOB Group, the likelihood of further weakness in AUD/USD seems to be losing momentum.

Key Quotes

24-hour view: We expected AUD to test the support at 0.6700 yesterday. Our view was incorrect as AUD rose to a high of 0.6795. In early Asian trade, AUD fell sharply. The price actions are likely part of range-trading phase. Today, we expect AUD to trade between 0.6720 and 0.6800. 

Next 1-3 weeks: On Monday (24 Jul, spot at 0.6730), we highlighted that “downward momentum is beginning to build.” We added, “If AUD breaks below 0.6700, it could continue to weaken to 0.6665.” AUD did not break 0.6700. Yesterday, AUD rebounded to a high of 0.6795, not far below our ‘strong resistance’ level of 0.6800. Downward momentum is fading, and the chance of a break of 0.6700 has decreased. However, only a breach of 0.6800 would indicate that AUD has moved into a consolidation phase.