In the view of UOB Group’s Markets Strategist Quek Ser Leang and Senior FX Strategist Peter Chia, AUD/USD should maintain its current consolidative mood for the time being.
24-hour view: Two days ago, AUD broke below a strong support at 0.6355 and dropped sharply to 0.6332. Yesterday, we indicated that “the sharp drop appears to be overdone, and AUD is unlikely to weaken much further.” We expected AUD to trade in a range between 0.6330 and 0.6390. Instead of trading in a range, AUD rebounded robustly to a high of 0.6432. The strong rebound could test 0.6455 before easing. The major resistance at 0.6480 is unlikely to come into view. Support is at 0.6405, followed by 0.6380.
Next 1-3 weeks: After AUD broke below the strong support level of 0.6355 and reached a low of 0.6332, we highlighted yesterday (28 Sep, spot at 0.6355) that “while the price action suggests AUD is likely to weaken further, downward momentum is not that strong, and the support at 0.6280 is unlikely to be reached anytime soon.” We also highlighted that “AUD is likely to remain under pressure unless it breaks above the ‘strong resistance’ level, currently at 0.6430.” In NY trade, AUD rose to a high of 0.6432. The breach of the ‘strong resistance’ level has invalidated our view. Overall, AUD is still likely trading in a range, probably between 0.6360 and 0.6480.
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