Australian Dollar (AUD) could drop below 0.6370 against the US Dollar (USD) but might not be able to maintain a foothold below this level. In the longer run, AUD must break and hold below 0.6370 before a move to 0.6330 can be expected, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
Below 0.6370, a move to 0.6330 can be expected
24-HOUR VIEW: "AUD fell sharply on Tuesday. Yesterday, Wednesday, we indicated that 'the decline appears overextended, and rather than sustaining its downward momentum, AUD is more likely to trade in a lower range of 0.6400/0.6470.' AUD then traded between 0.6396 and 0.6464. Downward momentum is building, and today, we expect AUD to weaken toward 0.6370. A break below this level is not ruled out, but oversold conditions indicate that AUD might not be able to maintain a foothold below this level. The next support at 0.6330 is unlikely to come under threat. Resistance levels are at 0.6420 and 0.6440."
1-3 WEEKS VIEW: "We highlighted yesterday (08 May, spot at 0.6430) that AUD 'appears to have entered a consolidation phase, and for the time being, it is likely to trade between 0.6370 and 0.6515.' AUD then fell to 0.6396, closing at 0.6401, lower by 0.37%. The slight increase in momentum is not enough to suggest a sustained decline just yet. AUD must break and hold below 0.6370 before a move to 0.6330 can be expected. The likelihood of AUD breaking clearly below 0.6370 will remain intact as long as 0.6460 is not breached in the next few days."
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