AUD/USD: Further decline loses momentum – UOB

In the opinion of FX Strategists at UOB Group Quek Ser Leang and Peter Chia, AUD/USD’s probability of a decline to the 0.6760 region now looks diminished.

Key Quotes

24-hour view: “Yesterday, AUD rose to a high of 0.6887 before closing at 0.6868 (+0.75%). The underlying tone has improved somewhat and AUD could advance from here. That said, any advance is unlikely to challenge the strong resistance at 0.6920 (there is another resistance at 0.6900). On the downside, a breach of 0.6830 (minor support is at 0.6850) would indicate that the mild upward bias has dissipated.”

Next 1-3 weeks: “Our latest narrative was from last Thursday (30 Jun, spot at 0.6880), where AUD could break 0.6860. We indicated that the next support is at 0.6830. While our view for AUD to weaken was not wrong, we did not expect the price actions on Friday where AUD plummeted to 0.6764 before rebounding sharply. While there is room for further AUD weakness, the probability for AUD to move below 0.6764 is not high. Overall, only a break of 0.6920 (‘strong resistance’ level previously at 0.6940) would indicate that the weakness in AUD has run its course.”