AUD/USD risks a deeper pullback on a close below the 0.7400 mark, noted FX Strategists at UOB Group.
24-hour view: “Our expectation for AUD to ‘trade sideways between 0.7450 and 0.7500’ was incorrect as it rose to 0.7488 before plummeting to 0.7412. The rapid drop appears to be running ahead of itself but there is scope for AUD to dip below the major support at 0.7400. In view of the oversold conditions, AUD is unlikely to able to maintain a foothold below this level (next support is at 0.7380). On the upside, a breach of 0.7465 (minor resistance is at 0.7445) would indicate that the current downward pressure has eased.”
Next 1-3 weeks: “Two days ago (14 Jul, spot at 0.7440), we highlighted that AUD ‘could trade within a 0.7400/0.7500 range’. We added, ‘the bias still appears to be tilted to the downside but AUD has to close below 0.7400 before a sustained decline can be expected’. There is no change in our view for now even though the prospect for AUD to move clearly below 0.7400 has increased. Looking ahead, the next major support below 0.7400 is at 0.7350.”
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