AUD/USD remains bearish with eyes on 0.7145/60 – UOB

FX Strategists at UOB Group keep the bearish view on the Aussie Dollar, seeing a potential drop to the 0.7145/60 band.

Key Quotes

24-hour view: “We expected AUD to “drift lower and test the previous low at 0.7238” last Friday but it sliced through the support and plummeted to a low of 0.7177. The subsequent weak daily closing in NY (0.7193) indicates that it is too early to expect a recovery. In other words, further weakness would not be surprising but 0.7145 is a major long-term level and is expected to offer solid support. A clear break of this major support seems unlikely, at least for today. On the upside, we expect 0.7235 to be strong enough to cap any intraday bounce (minor resistance is at 0.7210)”.

Next 1-3 weeks: “While we indicated last Friday (31 Aug, spot at 0.7265) the “the year-to-date low of 0.7203 appears to vulnerable”, the manner of which AUD sliced through this strong support was not exactly expected as it plummeted to a low of 0.7177. The break of key support coupled with the rapidly improving downward momentum suggests that the 2-weak neutral phase has ended. While we hold a bearish AUD view now, we are mindful of the long-term support zone of 0.7145/60, being the low in 2017 as well as the 10-year rising trend-line support. Such strong levels may not yield so easily, at least not on the first attempt. In order to maintain the current momentum, AUD has to stay below 0.7260 as a break of this ‘stop-loss’ would indicate that AUD has made a short-term bottom. Looking further out, a break of 0.7145 would shift the focus to 0.7100”.