AUD/USD: To test solid resistance at 0.6580 – UOB Group

Room for the Australian Dollar (AUD) to rebound, but any advance is expected to face solid resistance at 0.6580. AUD weakness seems to be overextended, both time- and price-wise, but stabilisation is only upon a breach of 0.6615, UOB Group FX analysts Quek Ser Leang and Peter Chia note.

To stabilize only after a break above 0.6615

24-HOUR VIEW: “AUD fell sharply two days ago. Yesterday, we indicated that ‘the impulsive decline is likely to continue, and the next level to watch is 0.6530.’ Our view of AUD weakening was not wrong, even though it fell more than expected to 0.6511 before rebounding. Severely oversold conditions suggest there is room for AUD to rebound further. However, any advance is expected to face strong resistance at 0.6580 (minor resistance is at 0.6560). Support levels are at 0.6525 and 0.6510.”

1-3 WEEKS VIEW: “Yesterday (25 Jul, spot at 0.6575), we indicated that ‘the outlook for AUD remains negative, and the next level to monitor is 0.6530.’ AUD then fell to a low of 0.6511. The AUD weakness that started in the middle of last week seems to be overextended, both time- and price-wise. However, only a breach of 0.6615 (‘strong resistance’ level was at 0.6630 yesterday) would indicate that the weakness has stabilised. As long as the ‘strong resistance’ is not breached, there is still a chance, albeit not a high one, for AUD to decline further to 0.6480.”