In opinion of FX Strategists at UOB Group, the outlook on the Aussie Dollar has now shifted to bearish from neutral in the near term.
24-hour view: “We expected “a dip below 0.7348” last Friday but AUD plunged instead and hit a low of 0.7280 (before extending its decline early this morning to 0.7251). The rapid decline appears to be running ahead of itself and while a dip below 0.7250 would not be surprising, we do not expect a sustained decline below this level (next support is at 0.7220). On the upside, only a break of 0.7350 would indicate that the current weakness has stabilized (minor resistance is at 0.7320)”.
Next 1-3 weeks: “We highlighted on Friday (10 Aug, spot at 0.7375) that there is “room for AUD to drift lower and test 0.7310”. The subsequent price action is anything but a ‘drift’ as AUD sliced through several support levels with ease as it plummeted to a low of 0.7280 (before hitting a fresh low of 0.7251 early this morning). The impulsive break-down suggests that AUD has moved into a bearish phase and the immediate ‘target’ is at 0.7220 with relatively high odds for extension to 0.7160. ‘Stop-loss’ is at 0.7380 even though on a shorter-term note, 0.7350 is already a formidable resistance level”.
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