AUD/USD could extend the decline to 0.6600 – UOB

The continuation of the downtrend could push AUD/USD to the 0.6600 region once 0.6640 is breached, suggest FX Strategists at UOB Group Lee Sue Ann and Quek Ser Leang.

Key Quotes

24-hour view: “We expected AUD to ‘range-trade within a range of 0.6685/0.6750’ yesterday. AUD subsequently traded within a lower range than expected (0.6677/0.6747) before closing on a soft note at 0.6691 (-0.51%). Downward pressure has increased a tad and AUD could drop below 0.6670 but the next support at 0.6640 is unlikely to come under threat for now. Resistance is at 0.6715 followed by 0.6735.”

Next 1-3 weeks: “We turned negative on AUD one week ago on 14 Sep (spot at 0.6735). As AUD declined, in our most recent narrative from Monday (19 Sep, spot at 0.6725), we indicated that further AUD weakness is still likely but oversold conditions could lead to consolidation first. After consolidating for the past couple of days, shorter-term downward momentum is building again. In other words, AUD appears to be ready to resume its decline towards 0.6640. A break of this level would shift the focus to 0.6600. Overall, only a breach of 0.6770 (no change in ‘strong resistance’ level from yesterday) would indicate that AUD is unlikely to weaken further.”