The Australian Dollar (AUD) is likely to weaken; the significant support at 0.6425 is not expected to come into view (there is another support at 0.6455), UOB Group FX analysts Quek Ser Leang and Lee Sue Ann note.
Bears may try to push towards 0.6455
24-HOUR VIEW: “We expected AUD to trade in a range between 0.6515 and 0.6565 yesterday. However, after rising to 0.6560, it fell sharply to a low of 0.6490. Downward momentum is building, and today, AUD is likely to weaken even though the significant support level at 0.6425 is not expected to come into view (there is another support at 0.6455). To maintain the momentum buildup, AUD must remain below 0.6525, with minor resistance at 0.6510.”
1-3 WEEKS VIEW: “Yesterday (01 Aug, spot at 0.6545), we indicated that ‘if AUD breaches 0.6565, it would suggest that the weakness in AUD from two weeks ago has stabilised.’ AUD subsequently rose to 0.6560, then dropped sharply to close at 0.6502 (-0.52%). While conditions are severely oversold, from here, only a breach of 0.6550 (‘strong resistance’ was at 0.6565 yesterday) would mean that the weakness has stabilised. Until then, AUD could continue to weaken; even though it is unclear if it has enough momentum to break the significant support level at 0.6425.”
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