FX Strategists at UOB Group noted the pair could enter a bearish phase on a clear break below the 0.7715/20 band.
Key Quotes
24-hour view: “We anticipated a lower AUD last Friday but the pace and the extent of the decline exceeded our expectation by a wide margin. AUD not only exceeded the ‘target’ at 0.7550, it managed to edge below the 0.7713 low seen earlier this month (low of 0.7710 on Friday). While oversold, there is no sign of stabilization just yet and the immediate risk is still on the downside. That said, any further weakness is expected to be at a slower pace and could encounter considerable support at 0.7690. Only a move back above 0.7770 would indicate that the current weakness has stabilized (minor resistance is at 0.7745)”.
Next 1-3 weeks: “While we highlighted that the “immediate pressure is on the downside”, the subsequent rapid acceleration lower in AUD came as a surprise. The solid support zone highlighted at 0.7715/25 is being tested sooner than expected and a clear break of this level would indicate that the month-long neutral phase has ended and a move towards 0.7630 has started. This appears to be a likely scenario unless AUD can move and stay above 0.7770 within these few days”.
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