AUD/USD: A breach of 0.7005 seems unlikely near-term – UOB

A move below the 0.70 region in AUD/USD looks unlikely in the short-term horizon, noted FX Strategists at UOB Group.

Key Quotes

24-hour view: “We highlighted yesterday that ‘the risk still appears to be tilted to the downside but a break of last week’s low of 0.7095 is unlikely’. The subsequent weakness exceeded our expectation by a wide margin as AUD easily cracked 0.7095 and plunged to a low of 0.7057. The rapid drop appears to be running ahead of itself but there is room for AUD to move to 0.7045 first before the current weakness should stabilize. On the upside, a break of 0.7130 would indicate that the current weakness has stabilized (minor resistance is at 0.7105).”

Next 1-3 weeks: “The sudden and sharp drop in AUD yesterday that hit a low of 0.7057 came as a surprise (we were expecting AUD to trade within a broad range of 0.7080/0.7230). The rapid improvement in downward momentum indicates that AUD could weaken further even though the odds for a break of last month’s low near 0.7005 are not high. Overall, AUD is expected to trade on its back foot unless it can move above the ‘strong resistance’ level of 0.7165.”