AUD/USD could grind lower and test 0.6810 – UOB

FX Strategists at UOB Group noted AUD/USD could drop to the 0.6810 area on a close below 0.6865.

Key Quotes

24-hour view: “We expected AUD to weaken last Friday but held the view that “the next support at 0.6865 is unlikely to come into the picture”. Against our expectation, AUD dropped to 0.6862 before recovering slightly. In view of the oversold conditions, further sustained decline is not expected for today. AUD is more likely to consolidate and trade sideways, expected to be between 0.6860 and 0.6900”.

Next 1-3 weeks: “While we shifted our narrative for AUD from to “trade with an upside bias” to “trade sideways” last Thursday (13 Jun, spot at 0.6930), the pace of which the bottom of the expected 0.6865/0.6990 sideway trading range was tested came a surprise (AUD touched 0.6862 during NY hours last Friday). Downward momentum has clearly improved and from here, if AUD were to register a NY close below 0.6865, it would indicate the start of a move to 0.6810. The prospect for such a move is quite high unless AUD can reclaim 0.6935 within these few days”.